General Motors (GM, Financial) announced its plan to invest $1 billion through 2018 to expand and renovate its extensive 60-year-old Tech Center campus in Warren, which is north of Detroit. The company expects to hire around 2,600 new workers. The company’s Warren makeover plan has come amid a flurry of several other company investment proposals of the company. This is part of the automaker’s international facilities and product programs. Here’s a lowdown of the company’s investment plan to keep up with competition and improve market share.
A brief look at the investment plan
The automaker would be appointing workers carrying expertise in the core areas of IT, design and product engineering. These employees shall be deployed to assist the company’s forthcoming business expansion at the National Historic Landmark site. As of now, the Warren Technical Center has a workforce of around 19,000. The Tech Center was originally built in 1956 and spreads over 326 acres. Last year, the Department of the Interior and the National Park Service named the Tech Center as a National Historic Landmark.
The company expects the investment to enhance the capabilities of the Tech Center and modernize the workplace to improve efficiency of the process. Eventually, the capital spending shall support in refining the company’s offerings and delight customer. Besides, the investments in Warren would also be valuable for the state of Michigan. It will establish the carmaker’s pledge toward making superior jobs in the region.
The ceiling tiles of some of the most essential areas of the Technical Center are dilapidated, with tattered floors and archaic restrooms. General Motors’ executive vice president for global product development Mark Reuss said that the design zone, in particular, was badly hit during the flooding last year during summer. The campus’s boilers also need special attention, which are presently in a position of “absolute neglect and decay.”
The largest American automaker shall utilize this planned investment for restructuring the Design studios and making a parking deck for the workforce of Design. General Motors also wants to restructure and overhaul some of its existing research & development units. The company would also build a multi-storied IT building adjacent to the present Michigan IT Innovation Center with a parking deck for the Center's employees. Apart from this, the company will supplement the testing areas for the Advanced Energy Center and add new space. General Motors said the upgrades is scheduled to start as soon as this month and shall continue through 2018.
Matching up with competitors
The company wants to increase talent in infotainment and advanced powertrains to comply with regulations and keep up with its competitors’ products. Other carmakers are all involved in upgrading software and enhancing computing power in their cars as they progress toward developing driver-assist technology which aims to create autonomous vehicles.
Mark Reuss was quoted saying, “This is an investment in our people who work at the Tech Center because it is positioning the company for long-term growth by enabling new levels of innovation and collaboration into our workplace.”
General Motors’ capital outlay is in alignment with what it would cost to construct a factory. But it’s definitely not beyond the domain of automakers as its mandatory to invest in to build research centers and boost work related to product-development so as to stay competent.
The top global automaker, Toyota Motor (TM, Financial), incurred a cost of $1.2 billion in developing sites at Arizona, Michigan and California. It has declared to invest an additional $200 million for such progress. What’s important to note is that the investment is only for the company’s U.S. operations. Toyota’s main product development sites are located in its domestic market, Japan.
Flurry of investment plans
Less than a month ago, General Motors declared its intentions of a three-year investing plan of $5.4 billion to upgrade its facilities in the U.S. This also includes and investment of $783.5 million for three of its key Michigan facilities. A big chunk of this would be utilized for tooling and equipment that shall be required for future vehicle programs. A part of the investment (around $140 million) would be spent in upgrading the stamping facility and building a new body shop. This would help General Motors provide superior quality, striking design and cutting-edge technologies to its cars, trucks and crossovers.
In addition, the carmaker is amid a $4.4 billion makeover plan of its European operation along with a $12 billion investment partnership in China. In the current year, General Motors’ expects to spend $9 billion in capital expenditures, which is up 28% compared with 2015. The company also intends to put in $12 billion primp its ailing Cadillac division.
General Motors’ massive investment plans have come amid market share loss in some of its prime markets. The automaker’s market share in the U.S., the U.K., Germany, China and Brazil sank in the first quarter of 2015 compared with a year ago.
Last word
The company’s effort to regain its market share through strategic capital investments should bear positive results. General Motors’ Technical Center is well-regarded for its past and revered for its imperative contribution for the automaker’s future growth. The design dome is going to be the platform for General Motors’ future line up. It is envisioned to support the car maker’s aim of becoming the most esteemed auto company across the globe.
