TOLEDO, Ohio, (Reuters) – General Motors Co said yesterday it will invest about $2 billion in 17 U.S. plants, including one here that makes transmissions for small cars, as the automaker shifts from recovery mode to investing in future products.
GM said the investments over the next few years will create or preserve more than 4,000 jobs as it retools the plants in eight states. The company has 202,000 employees globally, including 77,000 in the United States.
“We are doing this because we are confident about demand for our vehicles and the economy,” GM Chief Executive Daniel Akerson said.
After speaking to workers at the 54-year-old Toledo Transmission Plant, Akerson told reporters that the company will expand production in line with sales increases.
“We don’t want to get in over our heads as far as supply and demand” in adding production capacity, Akerson said.
Investors and analysts have speculated on GM’s plans for its growing pile of cash as the company’s liquidity has reached $36.5 billion. It earned $3.2 billion in the first quarter after posting net income of $4.7 billion for all of last year, its first full-year profit since 2004.
Akerson declined to comment specifically on plans for the cash when asked by reporters.
He said having liquidity and cash on the balance sheet gives the company more flexibility, and “at the same time we have an obligation to our shareholders to try to maximize shareholder value. There are competing requirements and interests for all the cash.”
Other than saying “over the next few years,” GM officials did not disclose the timeline for the investments or say which other plants would be upgraded. More announcements would be made “over the next few months,” GM said.
Executives previously signaled GM’s focus on building cars would only grow, as shown by last week’s announcement to invest $131 million revamping the Bowling Green, Kentucky, factory for a new version of the iconic Chevrolet Corvette sports car. The Kentucky announcement is part of the $2 billion plan.
Another key issue as GM adds jobs is how many will pay so-called second-tier wages, which are about half those of veteran union-represented employees. The lower wages will be a sticking point as major U.S. automakers face labor talks with the United Auto Workers this summer.
GM filed for bankruptcy in 2009 after the U.S. housing downturn and a spike in gasoline prices the year before that caused consumers to turn away from its high-profit but fuel-hungry trucks and SUVs.
