NEW YORK (TheStreet) -- When the General Motors (GM) technical center opened in May 1956, the 710-acre campus was regarded as a wonder of the industrial world, important enough for President Dwight Eisenhower to attend the ceremony in Warren, Mich.
But GM's (GM) decision to undertake a $1 billion renovation of the center, announced Thursday, is an implicit acknowledgement that the automaker's laboratories, design studios and testing workshops are outmoded.
As such, GM faces a big hurdle recruiting top engineering and design talent in competition against rivals like BMW and Toyota (TM).
Refurbishment of the Warren facility comes on top of a $5.4 billion investment in GM's North American manufacturing plants, announced last month. GM said the latest investment could lead to 2,600 new jobs at the site. The center today houses 19,000 employees.
"We will transform this campus into a collaborative workplace of choice for our current team and future talent," said Mark Reuss, executive vice president, in a statement.
Since exiting bankruptcy in 2009 and filing an initial public offering in 2010, GM shares have been flat, lagging behind the rise of major U.S. stock indices, as well as rivals like Toyota. GM's performance may reflect broad caution by investors who wonder if the automaker has progressed from the slow, stumbling enterprise that had to be rescued and refinanced by the U.S. government.
Construction at the technical center begins this month and will continue through 2018, GM said. Among the projects are new design studios, an information technology building, testing labs, renovation of existing labs, office upgrades and additional parking.
Hints of the project came to light a month ago when the Warren city council approved a 50% tax abatement for GM over the next 12 years. As part of GM's presentation, the automaker pitched the new jobs to the city as well as 3,860 people who would be "retained" as a result of the investment.
One major engineering and design project that GM faces is the $12 billion upgrading of its Cadillac luxury division, which has been underway for more than a decade. The effort began with the creation of a new "design language" for the vehicles and progressed to the manufacture of CTS -- meant to compete with top German and Japanese luxury car brands. Since then, model proliferation by the German automakers has raised the ante, forcing GM to create many more models than it had anticipated, which requires more engineering and design resources.
GM's executive headquarters remains in the Renaissance Center, an office complex on the Detroit River built by Henry Ford II in an effort to spark an economic resurgence for the city. But the Tech Center, as it is known within GM, is the hub for engineering and design expertise.