General Motors Corp.'s investment in its Town of Tonawanda plant was hailed Wednesday as a $300 million vote of confidence, not only for the 69-year-old plant, a pillar of the local economy, but also for Buffalo's business base.
"We've been given new life today with this . . . investment," plant manager Steven Finch said.
GM announced it will make its most advanced eight-cylinder engine at Tonawanda for future luxury cars, with production beginning in 2008.
The bulk of the $300 million will pay for factory equipment, with $21 million going to site work and $1.5 million for training. The state has pledged $5 million to support GM's spending.
The decision to invest here shows that business believes the state can reverse its "perfect storm of unaffordability," Empire State Development Chairman Patrick Foye said.
The announcement brightens a gloomy period for Western New York's economy. Detroit-based automakers are in a crisis that has subtracted about 2,000 jobs from local auto component plants in the past year, through buyouts and early retirements.
In a separate announcement, GM said Wednesday that its global vehicle sales fell nearly 1 percent last year, to 9.09 million, because of weakness in the United States. Toyota, with an expected 9.04 million sales, narrowed its gap with the No. 1 automaker.
At Tonawanda, the new engine won't reverse job losses, officials said. The V-8 will protect the site's 1,860 jobs without adding to them. It will replace a five-cylinder engine that is moving to Flint, Mich.
But the switch replaces an older engine with a newly designed one that will likely be produced for many years and brings the state-of-the-art factory technology that comes with a new product.
"Finally I have a smile on my face," said Kevin Donovan, assistant regional director of the United Auto Workers. "Lately we haven't had too many smiles."
Bill Shaw, manufacturing manager for GM's Powertrain division, made the announcement at the Tonawanda plant, flanked by about 200 workers, managers and staff.
The dual overhead-cam engine will be GM's smoothest and most fuel-efficient eight-cylinder motor when it goes on sale in 2010-model vehicles, Shaw said. He wouldn't say what luxury vehicles the motor will power; one source said that Cadillac is a likely user.
In the past 10 years, GM has invested $1.5 billion in Tonawanda and sent four new motors here -- counting the new V-8 -- a record that none of the automaker's other engine plants can claim, officials said.
The Tonawanda complex makes a four-cylinder "Ecotec" engine for small cars like the Saturn Ion; a V-6 for sedans like Pontiac's G6; and the in-line four- and five-cylinder motors for the Chevy Colorado and other small trucks. It also makes a big 8.1-liter V-8 for boats, electric generators and commercial trucks.
While the investment poured in, however, the site's job base has fallen by about 2,300 jobs, or more than half, as GM automates work and cuts waste.
Shaw said he expects the job reduction trend to slow down. However, GM will continue to look for ways to be more efficient, he said. Tonawanda Engine will have a minimum of 1,350 full-time jobs over five years, according to Empire State Development.
The engine will be produced in Plant 5 of the Town of Tonawanda complex on Vulcan Street that was built in 2001 to produce in-line four- and five-cylinder engines for light trucks.
Plans call for producing 500 of the new motors a day when the line reaches full speed, replacing the work lost when GM shifts production of its five-cylinder engines to Flint. The V-8 line will employ about 150 workers.
To win the engine, UAW members approved changes in plant work rules that will reduce break periods.
According to union officials and GM engineers, the new production line will rely less on automation than the current one, reflecting a trend toward more flexible production schemes that use less single-purpose equipment.
The Erie County Industrial Development Agency in December approved an $8 million reduction in the plant's tax bill in return for the engine, cutting revenue for the town and school district as well as the county.
As part of the state's support, the New York Power Authority is consolidating the engine plant's job commitments for hydropower. The site receives a 23 megawatt allocation of subsidized power, saving $8 million a year on energy bills, the power authority said.
Erie County Executive Joel A. Giambra noted that Toyota is building a new assembly plant in Woodstock, Ont., where the government shoulders health care costs -- a major cost for GM in the U.S.