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GM to spend $5.4B on US factories over 3 years, add 650 jobs as Arlington council passes incentives

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DETROIT (AP) — General Motors plans to spend $5.4 billion to improve its U.S. factories during the next three years, creating about 650 new jobs.

The company gave details of $783.5 million of the investments on Thursday and says the rest will be announced in the coming months.

The investments come as Detroit automakers prepare for contract talks with the United Auto Workers union that will start this summer, and as many automakers including GM are announcing plans to build or expand factories in lower-cost Mexico. GM, like the others, is walking a line between moving more production south of the border and of keeping the union happy with additional investments in the U.S.

GM says it will spend $520 million on equipment for future models at its Delta Township plant near Lansing, Michigan. The company’s pre-production center in Warren, Michigan, near Detroit will get $139.5 million for a new body shop and metal stamping equipment. And the metal stamping plant in Pontiac, Michigan, will get $124 million.

Spokesman Bill Grotz wouldn’t say if any of the remaining $4.6 million would go to expand GM’s Arlington, plant that makes large SUVs. The plant is running flat-out to meet demand for vehicles such as the Chevrolet Tahoe, which has seen sales rise 33 percent so far this year. Low gas prices have added to a shift in the U.S. market from cars to SUVs.

General Motors Co. could make a $1.2 billion investment to expand the Arlington Assembly Plant, adding 1.2 million square feet to the plant over three years.

On April 28, the Arlington City Council approved incentives for the GM plant there. The incentives establish an investment zone that will allow the city to offer GM tax abatement incentive.

Prior to the vote, GM officials said in a statement: “GM is developing a business case for potential future investment at Arlington Assembly. An investment would fund facility improvements aimed at strengthening the plant’s manufacturing capability. We cannot share details at this time.”

According to a staff report on the incentive agreement, “the city has proposed a real and business personal property abatement of 80 percent for ten years to include building permit and development fee waivers. The abatement will apply to the added value of the real property physical expansion, estimated at approximately $307 million, as well as the added value of new equipment, estimated at approximately $986 million.

“As a result of the expansion and upgrades, 589 new permanent jobs will be added, for a total of 3,179 jobs.”

GM added a $200 million stamping plant in 2012 at the plant. The Arlington Assembly Plant in operation since January 1954. It was the company’s first air-conditioned automobile factory. Arlington Assembly, which switched from car to truck assembly in 1997, is the only facility that builds GM’s award-winning, full-size SUVs – Chevrolet Tahoe, Chevrolet Suburban, GMC Yukon and Cadillac Escalade. The SUVs now in production are all new and redesigned for the 2015 model year.

The investment in the Delta Township, Michigan, factory, which now make GM’s large crossover SUVs such as the Buick Enclave, Chevrolet Traverse and GMC Acadia, will go for equipment for unspecified new vehicles to be built there. Grotz wouldn’t identify the vehicles or say if they are likely to be SUVs.

The money for GM’s pre-production facility at its Warren, Michigan, technical center will help the company build higher-quality vehicles, Grotz said. The facility, which already combines production workers and product engineers to build early versions of new vehicles, will be able to do even more to spot problems early and fix them, Grotz said.

The Pontiac Metal Center investment will allow it to test dies that make body panels under regular production conditions, GM said in a statement. That will allow the company to make quality parts in a shorter amount of time.

“The common thread among our investments is the focus on product improvements that benefit customers,” said Cathy Clegg, the company’s vice president of manufacturing.

GM says it has spent $16.8 billion on its U.S. facilities since emerging from bankruptcy in June of 2009, creating more than 3,650 new jobs and preserving 20,700 others.

But in December, the company announced plans to invest $5 billion to modernize and expand its four factories in Mexico. In March, the company said it would spend $350 million on its Ramos Arzipe assembly plant so it can build the compact Chevrolet Cruze, which also is made at GM’s factory in Lordstown, Ohio, east of Cleveland.

A worker in Mexico costs car companies an average of $8 an hour, including wages and benefits. That compares with $58 in the U.S. for General Motors in the U.S., according to the Center for Automotive Research, an industry think tank in Ann Arbor, Mich.GM to spend $5.4B on US factories over 3 years, add 650 jobs

General Motors plans to spend $5.4 billion to improve its U.S. factories during the next three years, creating about 650 new jobs.

The company gave details of $783.5 million of the investments on Thursday and says the rest will be announced in the coming months.

The investments come as Detroit automakers prepare for contract talks with the United Auto Workers union that will start this summer, and as many automakers including GM are announcing plans to build or expand factories in lower-cost Mexico. GM, like the others, is walking a line between moving more production south of the border and of keeping the union happy with additional investments in the U.S. – Robert Francis of the Business Press contributed to this story.

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