GM to build electric motors in Maryland

By Peter Whoriskey
Washington Post Staff Writer
Tuesday, January 26, 2010; A10

Betting that hybrid and electric vehicles will play a growing role on American highways, General Motors is expected to announce Tuesday a $246 million investment to add production of electric motors at its White Marsh, Md., manufacturing plant.

The decision reflects confidence at GM and other automakers that the "electrification" of the U.S. fleet is not far away, with GM officials likening the importance of electric-motor technology to that of engines in gasoline cars.

The electric-motor project is expected to create about 200 jobs and will be funded in part by a $105 million grant from the Department of Energy, the automaker said. While GM did not disclose the project's location, sources familiar with the arrangements who spoke on condition of anonymity said it would be at the company's White Marsh facility. Gov. Martin O'Malley (D), Sen. Barbara A. Mikulski (D-Md.) and local officials have scheduled a news conference there Tuesday.

The announcement comes as the Washington Auto Show opens this week, and automakers are eager to show that the billions of dollars in U.S. investments -- both in rescuing the companies and in energy-efficiency initiatives -- are creating jobs.

Ford, the only major U.S. automaker that did not receive a direct government bailout, is set to announce Tuesday that it will build its next generation Explorer sport-utility vehicle at its Chicago manufacturing facilities, making an investment of $400 million to create as many as 1,200 jobs.

The new Ford jobs reverse a long-term trend at the company which, like GM and Chrysler, has drastically shrunk its U.S. manufacturing operations. The company, which employed 100,000 hourly workers in 2000, had just about 40,500 last year.

The new Explorer will be at least 25 percent more fuel efficient than its predecessor, and some of the company investment will be funded by a Department of Energy loan.

While the U.S. auto industry seemed on the brink of collapse last year, it has shown some signs of modest growth in recent months.

On Monday, GM announced that it will repay a $6.7 billion loan it received last year from the federal government by the end of June, and that company Chairman Edward E. Whitacre Jr. will become its permanent chief executive.

Whitacre, the former chief executive of AT&T, was installed in June as GM's chairman by the federal government during its rescue of the company. He assumed the role of interim chief executive in December when GM's board ousted Fritz Henderson.

"I certainly didn't come into this with that intention," Whitacre told reporters of his decision to take on the chief executive role. But "one thing led to another."

The U.S. government has invested $50 billion in the rescue of GM. In exchange, it is owed the $6.7 billion loan and $1.2 billion in preferred shares. The government also owns 60.8 percent of the company.

The $6.7 billion loan isn't due until 2015, but officials said the company is performing better than originally expected and could, therefore, fulfill its loan obligations earlier.

"We think this is good news for the taxpayers, good news for the country," said Ron Bloom, of head of the government's autos task force.

The bulk of the government's investment remains outstanding. The company might hold a public offering of stock in the second half of this year, at which point some of the government's ownership stake would be sold, Bloom said. It is not practicable to sell the government's entire percent stake in one fell swoop because it would likely outstretch demand.

"There will be a staged exit," Bloom said.

GM's investment in electric motors reflects the company's faith that the electric-car movement -- which has so far been done largely in a small, experimental way in the United States -- will become much broader.

Tom Stephens, GM's vice chairman for global product operations, said he thinks that while much of the discussion around electric-car technology has revolved around batteries, electric motors will be vital to their success.

Design of electric motors will help determine the lightness and affordability of the engines. While the company could simply purchase electric motors from suppliers, Stephens said it is critical for the company to master the technology.

The source of electric motors for the company's forthcoming Chevrolet Volt has not been announced. The electric motors designed and built by GM in Maryland are expected to go into some GM hybrid cars produced by 2013.

"They haven't been talked about at all and they're so important to the electrification of the automobile," Stephens said. "In the future, electric motors might become as important to GM as engines are now."

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