General Motors chairman and CEO Dan Akerson speaks about new investments at the General Motors Transmission Plant inToledo, Ohio. Akerson says GM will add or keep 4 000 jobs at 17 plants in eight states in the next year and a half, including 400 new hires at the Toledo plant. General Motors chairman and CEO Dan Akerson speaks about new investments at the General Motors Transmission Plant inToledo, Ohio. Akerson says GM will add or keep 4 000 jobs at 17 plants in eight states in the next year and a half, including 400 new hires at the Toledo plant.
Toledo - General Motors said on Tuesday it will invest about $2-billion in 17 United States plants, including a facility in Ohio that makes transmissions for small cars, as the automaker shifts from recovery mode to investing in future products.
GM said the plans will create or preserve more than 4 000 jobs as it retools the plants in eight states. The company employs 202 000 people 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.
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.
GM did not disclose the timeline for the investments or in what other facilities it would invest other than to say more announcements would be made “over the next few months”.
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 yield 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 US automakers face labor talks with the United Auto Workers this summer.
GM filed for bankruptcy in 2009 after the US 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.
The US automaker emerged from bankruptcy 40 days later thanks to a $52-billion taxpayer-funded bailout and sold shares in an initial public offering last November. Since exiting bankruptcy, GM said it has invested $3.4-billion in its US plants, creating or retaining more than 9 000 jobs.
The new investment is not a surprise and by delaying the details of the specific plants affected GM maximises the attention it will receive as it works to assure taxpayers that the bailout was money well-spent, said Mirko Mikelic, senior portfolio manager with Fifth Third Asset Management.
“They probably underinvested in some of these plants for the last few years,” said Mikelic, whose firm has held GM bonds and preferred securities in the past and still follows the stock. “They were keeping a handle on their cash. For years, in terms of R&D, they've been behind particularly Toyota (Motor Corporation).
The US government still owns 32 percent of GM's common shares, and many investors see that as an overhang on the stock. Last month, sources said the Treasury could sell a significant portion of its GM shares by fall. - Reuters