GM to invest $2 billion in 17 U.S. plants

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.