* U.S. automaker to build fuel-efficient engines
* Mexican president sees vote of confidence in country
(Adds background, details on investment and drug violence,
By Michael O'Boyle and Luis Rojas Mena
MEXICO CITY, Jan 20 General Motors Co (GM.N)
said it is investing $540 million in its motor plant in central
Mexico to build more fuel-efficient engines for the recovering
North American automobile market.
The move by GM, flush with cash after its 2009
restructuring in bankruptcy, follows other investments in
recent years by American, European and Asian automakers seeking
to produce more fuel-efficient models in Mexico.
Mexican President Felipe Calderon welcomed the GM news,
announced on Thursday, as a vote of confidence in Mexico, where
rising drug violence has worried some foreign companies.
"This action shows confidence in Mexico and the conviction
of one of the most important companies in the world that Mexico
is a safe and productive place to invest," Calderon said at an
event in the central industrial hub of Toluca, where GM
operates one of its five facilities in the country.
The U.S. automobile market bounced back in 2010 from a
four-year slump, and a 50 percent surge in Mexican vehicle
production last year helped speed the recovery of Latin
America's second-biggest economy out of a deep recession.
GM and other U.S. automakers are readying a new generation
of small cars to address a weakness in their product line-up
that cost them sales when gas prices spiked in 2008.
The new engine production line is being built at a plant
where GM shuttered production of gas-guzzling trucks during the
recession, Calderon noted.
Automobiles and auto parts account for around one-fifth of
Mexico's total manufactured exports. The country's recovery
depends on solid demand from the United States, which buys
around 80 percent of Mexico's exports.
GM Chief Executive Dan Akerson, who took over at the top
U.S. automaker in September, has been pushing for more
aggressive investment in new technology after cutbacks before
the bankruptcy slowed GM's projected roll-out of cars for 2011
GM will build 1.6-liter and 1.8-liter 4-cylinder engines at
the Toluca plant.
Central Mexico has continued to draw big investments from
major global companies even as some manufacturers are leery of
expanding in violence-wracked cities near the U.S. border,
where hundreds of plants churn out products for export.
Toluca has seen only 29 drug-related murders since late
2006, compared to more than 6,400 in the similarly sized border
city of Ciudad Juarez, according to a federal government
(Additional reporting by Kevin Krolicki in Detroit; editing by