GM to invest $257 million on Kan., Mich. plants to raise output of hot-selling midsize cars

By Maria Sudekum Fisher, AP
Wednesday, April 21, 2010

GM to expand Kan., Mich. plants

KANSAS CITY, Kan. — General Motors Co., hoping to capitalize on its hot-selling sedans and a growing trust in American-made cars, says it will invest $257 million in plants in Kansas and Michigan.

GM CEO Ed Whitacre used an appearance at the company’s Fairfax Assembly Plant to formally announce the automaker’s early payback of $8.1 billion in government loans to the U.S. and Canada. He also said GM would expand production at Fairfax and the Detroit-Hamtramck plant, both of which will build the next generation of the popular midsize Chevrolet Malibu.

Whitacre said $136 million would establish Fairfax as the Malibu’s main production facility, news that drew an extended round of applause from workers and dignitaries gathered for the announcement.

“I like that reaction so much I might have to say it again,” Whitacre said.

Another $100 million would expand production at the Detroit facility and deliver a boost to Michigan’s bleak economy, Whitacre said.

GM got a total of $52 billion from the U.S. government and $9.5 billion from the Canadian and Ontario governments as it went through bankruptcy protection last year. The U.S. considered as a loan $6.7 billion of the aid, while the Canadian governments held $1.4 billion in loans.

The U.S. government payments, made Tuesday, came five years ahead of schedule, and Whitacre said they are a sign that the automaker is on its way toward reducing government ownership of the company. The payments on the Canadian loans were also made Tuesday.

“We’ve developed a healthy, clean balance sheet and we’ve developed a cost structure that allows us to be competetive,” Whitacre said.

The factory investments in Kansas and Michigan won’t create new jobs, but will preserve jobs at both plants. The Kansas plant, which employs 3,869 workers, also builds the midsize Buick LaCrosse luxury sedan. The Detroit-Hamtramck plant, which has 1,048 employees, now builds the Cadillac DTS and Buick Lucerne large sedans and is gearing up to make the Chevrolet Volt rechargeable electric car.

During the financial crisis that led to GM filing for bankruptcy protection last year, the automaker closed 14 factories and shed more than 65,000 blue-collar jobs in the U.S. through buyouts, early retirement offers and layoffs. The company now employs about 40,000 hourly workers in the U.S.

After the event at the Kansas City plant, Whitacre was scheduled to fly to Washington, where he will meet with House Speaker Nancy Pelosi and other lawmakers.

GM’s moves come as a new poll finds that slightly more Americans now say the U.S. makes better-quality vehicles than Asia, with 38 percent saying U.S. cars are best and 33 percent preferring autos made by Asian companies, according to an Associated Press-GfK survey.

The poll suggests the shift in sentiment is largely fueled by a plunge in Toyota’s reputation and an upswing in Ford Motor Co’s. The poll was conducted in March, as Toyota was suffering bad publicity over its recall of more than 8 million vehicles around the globe.

When the same question was asked in a December 2006 AP-AOL poll, 46 percent said Asian countries made superior cars, while just 29 percent preferred American vehicles, reflecting a perception of U.S. automotive inferiority that began taking hold about three decades ago.

AP auto writer Tom Krisher in Detroit contributed to this story.

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