General Motors Company (GM) has announced investment amounting to $130 million at its three plants in the Midwest U.S., namely, Toledo, Ohio, Bedford, Indiana and Wyoming, Michigan.
The investment in the plants is a part of the automaker’s $2 billion investment program at 17 assembly and components plants in 8 states over the next 18 months in the U.S. Through the $2 billion investment plan, the company aims at create or preserve more than 4,000 hourly and salaried jobs at the plants.
Among these plants, Toledo see an investment of $83 million on top of $204 million received earlier under the same investment program. The new investment is aimed at upgrading the plant to manufacture six-speed transmissions, which will be used in the Buick Lacrosse luxury sedan beginning this fall and the 2013 Chevrolet Malibu sedan that are to launch early next year. It will add 30 jobs to the existing 1,600 jobs at the plant.
The Bedford plant will receive an investment of $32 million on top of $49 million obtained previously. The new investment will help the plant manufacture die-cast case and torque converter for six-speed transmission assembled in Toledo. However, it will not add any jobs to the existing 405 jobs at the plant.
The investment at both the Toledo and Bedford plants will help the company supply cars with eAssist, an optional system designed to improve fuel economy by 25%. The launch of both, the Buick and Malibu models will include eAssist.
These apart, GM will invest $15 million–$20 million separately in GM Components Holding plant in Wyoming, Michigan that will support various powertrain projects. The investment will retain 60 jobs at the plant.
Recently, GM announced that it would invest $65 million at its two engine plants in New York and Tennessee. The automaker will invest $33 million at its plant in Tonawanda near Buffalo, New York that will retain or create 100 jobs. The remaining $32 million will be invested in its Spring Hill plant in Tennessee, about 30 miles south of Nashville that adds or creates 63 jobs.
Apart from the above mentioned plants, facilities that received investment under the same plan include in Kansas City, Kansas; Bowling Green, Kentucky; Arlington, Texas; Bay City, Detroit; Flint, Lansing and Warren, Michigan.
GM, a Zacks #3 Rank (Hold) stock, earned a profit of $3.2 billion or $1.77 per share in the first quarter of 2011 that increased more than threefold from $865 million or 55 cents per share a year ago. However, more than half of the profits have been contributed by one-time gain from sales of the company’s ownership interest in Delphi Automotive LLP ($1.6 billion) and Ally Financial Inc. ($300 million).
Excluding these gains and a $0.4 billion goodwill impairment charge at GM Europe (GME) resulting from a change in accounting standards and charges of $0.1 billion at GM International Operations (GMIO) related to revised tax regulations affecting the company’s India joint venture, GM’s profit stood at $1.7 billion or 95 cents per share, topping the Zacks Consensus Estimate by a penny. It was also GM's biggest profit in 11 years since earning $1.8 billion in the second quarter of 2000.
Revenues during the quarter went up 15% to $36.2 billion on sales of 2.2 million vehicles globally, up 11% from the prior year. It exceeded the Zacks Consensus Estimate of $35.2 billion.
Strong demand for its fuel-efficient lineups including Chevrolet Cruze compact and Equinox crossover helped boost the company’s sales. The automaker occupied a market share of 11.5% during the quarter, up from 11.1% in the year-ago quarter.
However, GM is still lagging behind its hometown rival, Ford Motor Co. (F), in spite of selling more vehicle units. Ford posted a 48% rise in profit to $2.61 billion in the first quarter of 2011 from $1.76 billion in the same quarter of 2010. On earnings per share basis, profits rose 35% to 62 cents from 46 cents a year ago, thereby topping the Zacks Consensus Estimate by 12 cents.
The company’s revenues escalated 18% to $33.1 billion, surpassing the Zacks Consensus Estimate of $30.5 billion. The increase in revenues was backed by a 12% rise in sales to 1.40 million vehicles.
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