General Motors Co. (GM) announced investment amounting to $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.
Both the plants manufacture fuel-efficient 2.4-liter “Ecotec” four-cylinder engines for Chevrolet cars and crossover SUVs. The Tonawanda plant produces engines for Chevrolet Equinox and GMC Terrain crossovers while the Spring Hill plant makes engines for Malibu.
GM plans to add another 300–500 workers at both the plants as the Chevrolet models supported by the engine plants continue to gain popularity. Malibu is already among the top three selling cars, after Chevrolet Silverado and Ford Motor Co.’s (F) popular pick up truck, F-Series.
The engine plant at Spring Hill is the original site for the Saturn brand plant in 1980s. GM discontinued its Saturn brand soon after its bankruptcy reconstruction in 2009.
GM’s investment in both the plants is a part of its $2 billion investment plan at 17 assembly and components plants in 8 states in the U.S. Through the $2 billion investment plan, the company aims at creating or preserving more than 4,000 hourly and salaried jobs at the plants.
Recently, GM announced to invest $20 million in its Fairfax Assembly plant in Kansas City for machinery, tooling and equipment. The investment at the plant will help GM manufacture a hybrid model with eAssist – a light electrification technology that will boost highway fuel economy by 25%.
Apart from the above mentioned plants, facilities that received investment under the same plan include in Bedford, Massachusetts, Bowling Green, Kentucky; Arlington, Texas; Toledo, Ohio; 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.
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