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GM opening new plant in Detroit, couldn't be any better of a location!!!!

GM Set To Lay Out Plans For New Michigan Engine Plant
September 22, 2008: 04:45 PM EST

DETROIT -(Dow Jones)- General Motors Corp. (GM) on Thursday will lay out plans to build a new engine plant costing around $380 million in Flint, Mich., a move that comes as the struggling auto maker finalizes plans to shutter or consolidate more North American factories amid falling sales.

GM picked Flint to build 1.4-liter engines -- the smallest it has ever made in the U.S. -- to power the next generation of compact cars coming in 2010.

At the same time, GM is in the final stages of laying out plans to cut production at older factories that provide engines, transmissions and sheet metal for larger pickup trucks and sport-utility vehicles.

The dual paths underscore the enormous task GM and other auto makers face in adjusting to Americans' rapid shift away from trucks to smaller, more fuel- efficient vehicles.

The challenge is especially tough on Detroit's cash-strapped auto makers, heavily reliant on high-margin trucks. The companies are saddled with extra capacity to build big trucks while they scramble to meet demand for the smallest vehicles.

"The change is as much from trucks to cars as it away from V-8 engines and big V-6s to four-cylinder and more fuel-efficient V-6s," said Ron Harbour, a partner at the automotive consulting firm Oliver Wyman. "There's always a lot of attention given to assembly plants, but the powertrain plants are almost as big an issue or bigger."

GM in June said it would build the new small-engine plant in Flint as part of sweeping plans to become a leaner auto maker less reliant on trucks. Those plans hinged on GM's ability to secure tax rebates from state and local governments.

Those plans called for closing four North American truck plants and, eventually, more consolidation of powertrain and stamping plants. The company is expected to announce specifics of those plans within the next few weeks.

On Thursday, GM Chief Executive Officer Rick Wagoner is slated to attend a ceremony in Flint to announce the new factory, according to the company and city officials. The plant is still contingent on tax breaks from the state, which are to be voted on this week.

The Flint factory would provide engines for the Chevrolet Cruze, which will replace GM's Chevy Cobalt compact car in 2010. The engine would also go into the Chevrolet Volt plug-in electric car, which GM hopes to build by 2010. The Volt would use the engine to recharge a battery, which would have a 40-mile range, on longer trips.

Harbour said virtually all auto makers, even Japanese companies better known for fuel-efficient offerings, are faced with the expensive task of retooling lines and factories to make room for smaller engines.

U.S. passenger-car sales were down 2% through August from a year earlier, while light truck sales fell 19%.

Toyota Motor Co. (TM) halted production of its full-size Tundra pickup truck for three months and has been unable to meet demand for its hot-selling Prius hybrid.

Honda Motor Co. (HMC), meantime, will soon begin production at a four-cylinder engine plant in Ontario.

And Ford Motor Co. (F) is working to convert several of its truck factories into small-car plants.

-By Sharon Terlep, Dow Jones Newswires; [phone]; [e-mail].

http://money.cnn.com//news/newsfeeds/articles/djf500/200809221645DOWJONESDJONLINE000609_FORTUNE5.htm