Michigan to Get 7 Million GM (NYSE: GM) Investment | Financial Buzz

Michigan to Get $877 Million GM (NYSE: GM) Investment

General Motors (NYSE: GM) has announced its intention to spend about $877 million for a new assembly equipment and body shop at the company owned Flint Truck Assembly unit in Michigan. This investment is the latest installment of the company’s improvement initiative across its 40 American plants. The total estimated cost of such a venture is $5.4 billion.

GM’s plans

This investment is a portion of GM’s plan to install a number of body welding shops, new assembly lines and paint operations. All of them will be used to cater to future generations of the company’s best-selling models like Silverado pickups and also SUVs like Cadillac Escalade and Chevrolet Tahoe. The units will also contribute to the operations building the current models.

When it comes to Flint, their relation with GM is somewhat complex. The company is singularly responsible for the city’s notable expansion in the 20th century. Flint was then a prosperous town. The city, however, suffered a decline over a number of years, as GM shut down plants due to its shrinking market share. The past few years saw the company expanding a few operations in this area while reducing others. Cathy Clegg, the vice president responsible for manufacturing and also labor relations in North America has said that the investment will permit GM to utilize an increased innovative approach when delivering material within two important facilities. This will reduce handling and time taken to ship the parts.

New cars, new plants

The announcements were made during the initial negotiations stages between GM and United Auto Workers on the new draft of the national labor agreement. General Motors has made its commitment to spend the amount prior to making the labor agreement details. While a few analysts in Wall Street have questioned the rationale of rewarding its workers prior to a contract, this spending symbolize that labor is now a smaller component when it comes to the expense of building trucks and cars. It is important to update physical plants and tooling at all times.

Those familiar with General Motors’ plans say that the next generation SUVs and pickups will utilize a number of materials, including lightweight steel and aluminum, to shed critical weight and also gain fuel efficiency. This will also satisfy tougher federal standards. A totally different set of equipment will be used for assembling the future generation of vehicles compared to the ones used today.

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