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General Motors to Invest $1.3 Billion in Five US Facilities
Posted by: Live investor (IP Logged)
Date: December 17, 2013 11:12AM
The largest U.S. automaker, General Motors (GM), has been criticized for investing and expanding mostly in the overseas market, putting the domestic market on the back burner. The Detroit maker has finally responded by planning to invest about $1.3 billion across five of its U.S. plants in the next two years. The investment is expected to create around 1,000 jobs. There are several areas in which the automaker plans to put in money and upgrade technology and other processes.
General Motors plans to invest the funds in manufacturing high-quality pickup trucks and making engines and transmissions with better fuel efficiency. With improvements in the housing and construction sector, the automaker would be able to gain at this time when demand for pickup trucks is rising.
Coverage of the Investment
The carmaker would put in money in its assembly plant at Flint, Mi. It would also invest in the engine plant located at Romulus, Mi., which is close to Detroit. The company would allocate some to the transmission factory in Toledo, Ohio, and the casting unit situated at Bedford, Ind. However, the majority of the investment would go to General Motors’ Flint plant which is the carmaker’s oldest assembly unit.
The auto giant would invest about $600 million in the Flint assembly unit, while putting $493.4 million in the powertrain plant at Romulus. The unit at Flint assembles the Chevrolet Silverado and GMC Sierra pickup trucks. More than half the total investment is going towards this plant. This signifies that General Motors is aiming to make the maximum from the rebound in the U.S. automobile industry, which is primarily attributable to the housing sector that is driving pickup demand. The amount invested in Romulus would be used to buy equipment to manufacture an all-new six-cylinder engine and make a 10-speed automatic transmission which would make vehicles more efficient.
The Detroit-Hamtramck plant would receive $121 million of the total amount invested, which would be used to improve the logistics of the center. The Toledo transmission plant would get $30.6 million to enhance its current six-speed transmission production process and increase the capacity as well. Finally, the casting plant at Bedford, Ind., would receive $29.2 million.
Gaining Competitive Advantage
The company may have been criticized about concentrating and investing more in the international markets. However, Dan Akerson, the automaker’s chief executive, claims that General Motors invested over $10.1 billion across various states in the domestic market since 2009 when the company started recovering from bankruptcy.
Early this year GM said that it planned to invest around $16 billion in the domestic market and put $11 billion in its China factories and facilities. The company has a huge presence in the Chinese economy, which is the hottest destination for any automaker as it is a growing market with huge future potential. The investment plan is part of Akerson’s strategy to bolster the company’s North American profitability margins to catch up with Ford (F). Also, GM proposes to double its sales in China by the middle of this decade and continue to hold a dominant position in this budding international market.
Now the top Detroit automaker is working on gaining competitive advantage to beat overall competition by concentrating on increasing the quality and overall experience of the vehicles it offers. Accordingly GM is working on making better engines and transmissions. It is working on the 10-speed automatic transmission which would help the engine operate more smoothly and with higher efficiency as it has more gears. The other two big automakers that compete with GM in the pickup arena are Ford and Chrysler. General Motors is extremely proud of making such investments which have created and kept as many as 26,500 jobs across the nation. The company is confident it will produce better quality vehicles which will give it an upper hand over competitors.
Stocks Discussed: GM, F,