GM to spend $250M on engine space

By Don Shilling | February 25, 2009 at 12:10a.m.

Despite its pleas for more federal loans, General Motors is continuing to commit cash to bringing the Chevrolet Cruze and Volt to market.

The cash-strapped automaker said Tuesday that it will spend $250 million to prepare space in a factory in Flint, Mich., to make engines for the two small cars.

GM is in the midst of a $350 million upgrade of its Lordstown complex to prepare for the Cruze, a new compact car. GM also is preparing a factory in Detroit to produce the Volt, an electric car that will have its range extended by a gasoline engine.

The source of the engines for the cars has been up in the air since GM said in December that it was halting construction of a new engine plant in Flint. The automaker, which was in the process of asking for its first round of federal funds, said it didn’t have the cash to pay for structural steel and other items.

The new factory was to cost $370 million.

Since halting construction of the new factory, GM has received $13.4 billion in federal loans.

Sharon Basel, a GM spokeswoman, said the current engine plant in Flint has floor space that it didn’t have when product decisions were made last year. GM has since stopped making the Chevrolet Trailblazer and GMC Envoy, which used engines that were made in Flint.

The engines for the Cruze and Volt will be made in that space, Basel said. GM said it will install new equipment, however, that will allow multiple types of the four-cylinder engines to be produced efficiently.

The new engines will bring 300 jobs to the Flint plant, although Basel couldn’t say who will receive those jobs. The plant now has about 500 workers.

The Flint factory is to begin producing the new engines in December 2010.

The Cruze is to debut in April 2010, while the Volt is to launch later that year. Basel said GM has planned from the beginning to bring engines from Europe until the engine plant in Michigan was ready.

GM is launching the Cruze in other countries this year and has several factories that will be assembling the car.