DOW JONES NEWSWIRES
General Motors Corp. (GMGMQ) chose two sites in Michigan to
build small, fuel-efficient cars, and is in negotiations with state
and local government officials about economic incentives.
The auto maker, which is undergoing reorganization in bankruptcy
court, had considered sites in Michigan, Tennessee and Wisconsin.
The U.S. government is slated to own 60% of the company after it
emerges from bankruptcy.
The company's shares were up 2.6% at $1.20 in recent
trading.
GM selected an assembly plant in Orion and a stamping facility
in Pontiac, which are projected to employ about 1,400 workers if an
agreement is reached.
The plans fall under a tentative deal GM reached in April with
the United Auto Workers. The union agreed to concessions that will
allow GM to turn a profit on the vehicle, something that previously
had not been achieved in the U.S. because of its relatively high
labor costs. In return, GM agreed to build the car in the U.S.
rather than China as originally planned.
The Orion assembly plant is expected to turn out a combined
160,000 small and compact vehicles a year. While a final decision
has not been made on timing, retooling of the plants could begin
late next year, with production starting in 2011, the company
said.
GM plans to spend upwards of $700 million to produce the
vehicle.
Two other GM sites in Spring Hill, Tenn., and Janesville, Wis.,
also were considered. The Spring Hill plant may be used if demand
requires extra capacity, GM said. Chrysler LLC, which also
reorganized in bankruptcy, has merged its assets with Italian auto
maker Fiat SpA (FIATY), which plans to make more small cars for the
U.S. market as part of their combination.
-By Tess Stynes, Dow Jones Newswires; 201-938-2473;
tess.stynes@dowjones.com