GM suspends major work on Flint engine plant

DETROIT (Reuters) - General Motors Corp GM.N has suspended major work on the $370-million Flint, Michigan, engine plant where it plans to build a new small engine key to central to its effort to reinvent itself as a maker of fuel-efficient and all-electric cars.

The move comes as the Bush administration weighs a request for emergency loans for GM and its smaller rival Chrysler LLC. GM has said it would run short of cash by January without a federal bailout.

GM spokeswoman Sharon Basel said Wednesday GM had decided to suspend construction work on the plant as its cash crunch worsened. She said GM anticipated that the suspension would be temporary.

The new plant, being built next to an existing engine plant in Flint, is scheduled to build a turbocharged 1.4-liter engine for the Chevrolet Cruze small car and another version of the engine to provide backup power to the all-electric Chevrolet Volt.

"It's on a temporary hold, and what that means is that we're not going to be committing to any cash outlays for structural steel or other things," Basel said. "In the last month, things became extremely dire."

GM and union officials have said that the new engine plant would save jobs for 300 United Auto Workers-represented workers whose positions would otherwise have been eliminated.

Basel said there had been no change to GM's commitment to push ahead with the Volt for a launch in 2010. "There is no impact on the start of production," she said.

GM Chief Executive Rick Wagoner, who faced calls for his resignation during the debate on an auto bailout package in Congress, attended a ribbon-cutting event in late September to mark the start of construction on the new plant in Flint.

The Volt represents the centerpiece of GM's effort to break a costly association with gas-guzzling trucks and SUVs.

(Reporting by Kevin Krolicki, editing by Gerald E. McCormick)