UPDATE 1-Ford investing $200 mln to build turbocharged engine in Ohio

Thu Feb 21, 2013 12:00pm EST

* Shifts output of 2-liter EcoBoost engine from Spain

* Production starts in late 2014, adds 450 jobs in Cleveland

* Valencia plant still to make EcoBoost engine for Europe

By Deepa Seetharaman

DETROIT, Feb 21 (Reuters) - Ford Motor Co plans to invest nearly $200 million in its Cleveland engine plant to build a 2-liter version of its popular turbocharged engine for the company's North American lineup.

Production of the 2-liter "EcoBoost" engine is expected to start in late 2014. The move will add 450 jobs at the Cleveland factory, which now makes Ford's 3.5-liter turbocharged engine as well as a 3.7-liter V6 engine, the company said on Thursday.

The second-largest U.S. automaker has heightened its focus on fuel efficiency over the last seven years and the EcoBoost represents a crucial piece of its vehicle strategy.

Ford's factory in Valencia, Spain currently builds the 2-liter turbocharged engine for North America and Europe. Rising demand for fuel-efficient models in North America prompted Ford to shift production of the engine to Ohio from Spain, it said.

That Valencia factory will continue to make the EcoBoost engine for Ford vehicles built in Europe, and Ford said overall employment at the plant would not be hurt by the move.

Ford introduced its turbocharged EcoBoost in 2009 and aims to boost production of the engine to 1.6 million this year, about 100,000 higher than the company's previous goal.

Turbocharged engines have grown increasingly important as automakers face stringent fuel-economy standards over the next several years. Ford, one of the most vocal advocates for this technology, says its EcoBoost-equipped models have saved as much as 20 percent in fuel compared with their larger predecessors.

But earlier this month, Consumer Reports magazine found that the benefits of turbocharged engines were overstated. In some cases, turbocharged models are slower and less fuel-efficient, the magazine said.

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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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