General Motors announced Tuesday it will spend $890 million to upgrade five of its North American plants, including one in southern Ontario.
The Detroit automaker confirmed it will spend $235 million to upgrade its powertrain plant in St. Catharines, Ont., where employees will soon be working on a new generation of fuel-efficient V-8 engines.
GM Canada president Kevin Williams said the investment "marks another positive step forward in our strategy to deliver powertrain technologies that improve fuel-efficiency while meeting the needs of our customers."
"The new engine allocation at St. Catharines is the latest in a series of investments in our Canadian facilities -- great news for employees, the CAW, dealers, suppliers and the communities affected."
Federal Industry Minister Tony Clement said GM's decision to do business north of the border "is yet more evidence that our government made the right decision last year to fight for Canada's automotive industry and the almost half-a-million jobs that depend on it."
The Ontario plant has nearly 1,900 unionized employees, according to figures posted on the CAW Local 199 website.
Charlotte Yates, a labour and auto industry analyst and the dean of social sciences at McMaster University, told CTV News Channel that the investment is significant for two reasons: it is an investment in Canada, and not in Mexico or the U.S., and it's an engine plant, which requires highly-skilled labour.
"It's a product that has a high value-added, and for that reason it a significant benefit for Ontario," she said.
But the biggest single investment will be the $400 million expenditure at the plant in Tonawanda, N.Y.
GM will also spend $115 million to upgrade a foundry that produces engine blocks in Defiance, Ohio; $111 million on its parts plant in Bedford, Ind.; $32 million on a parts factory in Bay City, Mich.
Investment follows cuts
Since GM came out of bankruptcy last July, it has invested $1.5 billion at 20 of its facilities on both sides of the border. Those investments have either restored or created some 7,500 jobs.
Demand for GM products has already led the automaker to recall 700 laid-off workers to its assembly plant in Oshawa, Ont., and to the CAMI plant in Ingersoll, Ont.
Ontario Premier Dalton McGuinty said GM has shown "that the trend line is moving in the right direction."
After undergoing massive layoffs and receiving a cross-border bailout, BNN's Michael Kane said GM is now building itself back up and putting itself in a position to eventually divest itself of government influence.
"It is now going to invest in factories to make them more efficient, to get the productivity up and that way contribute toward profitability," Kane told CTV's Canada AM.
"Profitability is the key, because when they turn a profit next, then they can start thinking about listing their shares on the New York Stock Exchange again. And that's a big thing, that's a big hurdle to overcome."
Last week, GM announced that it had paid back the $8.1 billion it borrowed from the U.S. and Canadian governments. It needed the money after losing $88 billion over much of the last decade.
The automaker was initially loaned $61.5 billion from the two governments, but when GM went into bankruptcy, the cash-portion of the loan was changed.
Instead, Washington was owed $6.7 billion in cash and Ottawa was owed $1.4 billion.
The remainder of GM's debt was converted to shares now held by the two governments.
At present, Washington owns 61 per cent of the automaker, while Ottawa owns about 12 per cent.
GM plans to have a public stock offering, which will allow the U.S. government to unload its stock and recoup its investment on behalf of taxpayers.
With files from The Associated Press and The Canadian Press
