GENERAL MOTORS TO INVEST $1.3 BILLION TO UPGRADE 5 MIDWEST FACTORIES
c.2013 New York Times News Service
DETROIT — After a year of big profits and surging sales in the United States, the U.S. automakers are investing heavily in their domestic operations in anticipation of more good times to come.
General Motors, the nation’s largest auto company, said Monday it would spend about $1.3 billion to upgrade five factories in the Midwest, including a major overhaul of one of its highly profitable truck plants.
The news followed Ford Motor’s announcement last week that it was hiring 5,000 workers next year and introducing 16 new vehicles in North America.
The investments show confidence in the continued growth in 2014 of the automotive sector — one of the economy’s bright spots this year.
“Today’s announced plant upgrades continue the momentum of a resurgent auto industry,” Mark Reuss, head of GM’s North American division, said Monday at the company’s pickup truck plant in Flint, Mich.
GM said it would invest $600 million in the Flint facility, including building a new paint shop that would make its trucks more competitive in the expanding pickup segment.
The company is also spending $493 million at another Michigan factory to produce a new transmission that increases fuel economy and to expand capacity for a high-tech V-6 engine. The rest of the new spending will be at plants in Michigan, Ohio and Indiana.
GM said the investments would create or preserve about 1,000 manufacturing jobs, and position the company to take advantage of more growth in the critical U.S. market.
“Today’s announcement is a win for American workers,” said Joe Ashton, an official of the United Auto Workers, which represents 7,500 employees at the five affected plants.
The new investments are being made after the strong performance of the U.S. auto market this year. Manufacturers sold 14.24 million new cars and trucks through November, an 8.4 percent rise from a year ago.
The industry is on pace for its best annual sales since 2007. And analysts are predicting that the year could close out with exceptionally healthy results in December.
“Floor traffic surged during the opening half of the month, nearly 18 percent higher than a year ago,” said a report issued Monday by the marketing firm CNW Research.
For GM, the investment announcement helps it end the year on yet another high note.
Last week, the Treasury Department said it had sold the last of the GM stock it took in exchange for the government’s $49.5 billion bailout of General Motors in 2009.
And the company also made history by naming Mary T. Barra to take over as chief executive in January, becoming the first woman to rise to the top of a major automaker.
GM’s departing chief executive, Daniel Akerson, said Monday that Barra’s promotion was an important step in the company’s reinvention since its bailout and bankruptcy four years ago.
“On that day, for the first time in decades, all eyes at General Motors pointed toward the future,” Akerson said in a wide-ranging speech at the National Press Club in Washington.
Industry analysts expect sales in the U.S. to be even better next year and automakers — particularly GM, Ford and Chrysler, the third Detroit manufacturer — are introducing new products to keep pace.
GM is expected to show its new midsize pickup truck, the GMC Canyon, at the Detroit auto show in January. Chrysler, for its part, will take the wraps off a new Chrysler 200 sedan.
And while it will not confirm its plans, analysts predict that Ford will show off the latest version of the top-selling vehicle in America, the F-150 pickup.
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Ford executives said last week that despite the steady growth in overall sales, it was still difficult to gain even the smallest amount of market share.
“The most important thing for us is to have vehicle choices for all these consumers,” said Mark Fields, Ford’s chief operating officer.
The company is adding capacity at a number of plants, including its big truck factory in Kansas City, Mo. All automakers are stretching the limits of their existing plants rather than building expensive new ones as sales surge.
Ford said it would add about 5,000 jobs in the United States, most of which will be engineers and salaried employees working on fuel-efficient engines and new technologies. The automaker is also building two new factories in China and one in Brazil.
“This is the fastest and most aggressive manufacturing expansion the company has undergone in 50 years,” said John Fleming, Ford’s global manufacturing chief.
The Detroit companies and their Japanese and German rivals gain a sizable portion of their corporate profits from sales in the United States, where the market appears to be healthier than it has been in decades.
By drastically downsizing in recent years, the industry is matching its production to demand far better than in the past. It is avoiding building large inventories of unsold cars, which can prompt sales discounts that eat away at profits.
GM has reported 15 consecutive profitable quarters, which allows it the financial latitude to spend more money on new products and plant improvements.
“We are in a capital-intensive business that demands steady and significant investment,” Akerson said.