GM to Build New Small Car in Michigan

Updated with comments from GM North America president.

To no one's surprise, General Motors(GMGMQ Quote) says it will manufacture a future small car in Michigan.

The automaker said it will use its assembly plant in Orion Township and its stamping facility in Pontiac, Mich., to build the car, restoring 1,400 jobs -- 1,200 in Orion and 200 in Pontiac. GM would invest $600 million to $800 million to upgrade the Orion plant.

The decision assumes a successful outcome to economic incentive negotiations between GM and state and local government officials, GM said.

GM said recently that the company would build a small car at one of three U.S. sites: Orion; Spring Hill, Tenn., or Janesville, Wis. Two weeks ago, executives met with U.S. senators from the three states under consideration.

The automaker has provided few specific details on the new car. However, Troy Clarke, president of GM North America, told reporters on a conference call Friday that the car would utilize a B-platform, making it similar in size to the Chevrolet Aveo, Pontiac G3 and Opel Corsa, and would be built at several plants around the world.

The plan is to build up to 160,000 cars annually at Orion. Clarke said the new car would account for "north of 100,000 vehicles," with the additional capacity used to produce a second, unspecified vehicle. One option, he said, is to build the Chevrolet Cruze if demand for that car exceeds the capacity of the Lordstown, Ohio plant.

"GM will be the first and only manufacturer to make a small vehicle in the United States," Clarke said. "(That's) a size vehicle that everybody imports." He said changes to the automaker's cost structure, particularly labor cost reductions, make domestic production of a small car possible.