GM Said to Splurge $1 Billion Expanding Tech Center Near Detroit

General Motors Co.'s (GM) Aerodynamics Laboratory
Members of the media take a tour of the wind tunnel at General Motors Co.'s (GM) Aerodynamics Laboratory in Warren, Michigan, U.S. Photographer: Jeffrey Sauger/Bloomberg

First a big purse for some new Cadillacs. Then a $5 billion share buyback. Next up may be $1 billion in renovations to give its engineers some nicer office space.

General Motors Co. is considering spending as much as $1 billion to renovate its sprawling 60-year-old Tech Center campus in Warren, Michigan, just north of Detroit, according to a person familiar with the plan. The company has asked the city for tax breaks but has not approved the project, spokesman Dan Flores said.

If that sounds like a lot of money, it is -- in line with what it costs to build a factory or develop a line of autos. But it’s not out of the realm of what carmakers have to spend to build the product-development works and research centers they need to compete.

“It’s very possible that the place really hasn’t been updated,” said Joe Phillippi, president of AutoTrends Inc., a consulting firm in Andover, New Jersey. “Given the things GM needs to do and all of these advanced technologies, they probably need the space.”

Toyota Motor Corp., the world’s largest automaker, spent $1.2 billion developing sites in Arizona, California and Michigan and has announced plans to invest almost $200 million more. And that’s just for its U.S. operations. The company’s primary product-development sites are in Japan.

For Detroit-based GM, the renovations would include some new buildings to house 2,500 new hires, mostly in electrical engineering, information technology and software development, said the person familiar with the matter, who asked not to be identified because the plans are private.

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The cars of today require a lot more software than they used to. And the cars of tomorrow, especially if they are self-driving and running on hydrogen or electricity, will require even more, Phillippi said.

GM’s Tech Center, home to everything from basic mechanical engineering to design studios to the battery lab for electric-drive autos, hasn’t really had major renovations since it was built in the 1950s, Flores said.

“The campus is in need of renovations to make it a world-class facility,” he said. “But we have not approved the project yet.”

The proposed project and its hefty price tag came to light Thursday when the mayor of Warren talked about GM’s proposal in a speech, the Detroit Free Press reported.

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