General Motors has opened its largest single investment in Australia in more than 20 years - Holden's $400 million global V6 engine plant in Port Melbourne, Victoria.

The plant will make up to 900 engines a day or 240,000 engines a year, with capacity to expand to 300,000 engines a year, which will ultimately create more than 500 jobs.

The Port Melbourne facility is Holden's first new engine plant in 22 years and will deliver fully locally produced six-cylinder engines for the first time since 1986.

Holden expects to generate up to $450 million a year in V6 engine exports, boosting the company's contribution to Australia's balance of trade to more than $1.5 billion a year.

The global V6 engine family will be exported to GM brands around the world and power future Holdens for domestic and overseas markets. The Port Melbourne facility is the second GM operation to manufacture the global V6 engine.

Holden will share production with the GM of Canada plant in St Catharines, Ontario, which commenced production in March 2003.

The first engines from the Port Melbourne plant are destined for GM de Mexico, where they will be installed into the 2004 model Buick Rendezvous crossover vehicle.

These engines will power Holden Commodores from 2004 and plans are being developed to export to other markets in the United States, Europe and Asia.

The global V6 engine family was developed by GM Powertrain. The all-aluminium engine comes in three displacement sizes - 2.8 litre, 3.2 litre and 3.6 litre - with the capacity to be expanded to 3.8 litre.

The engine also features dual overhead camshafts, 24 valves and continuously variable cam phasing. The engines can be used for front, rear or all wheel drive vehicles and are compatible with hybrid electric applications.

GM chief executive Richard Wagoner said the plant was further indication that Holden was becoming a centre of expertise within the GM family, particularly in the Asia-Pacific region.

He said the V6 engine exports added to Holden's contribution to developing large rear wheel drive vehicles, including the Pontiac GTO coupe based on the Holden Monaro.

Wagoner praised Holden for its "one company" focus, its ability to deliver strong results and its "sense of urgency" and speed to market. "Holden is very much part of GM's bigger plans for the long term," Wagoner said.

Holden's soon-to-retire chairman and managing director, Peter Hanenberger, said the Port Melbourne facility was a major part of Holden's strategy to become a niche global manufacturer servicing a range of GM markets.

The new plant has three machining and sub-assembly lines for the engine's block, crankshaft and cylinder heads. The engines are then built on a common assembly line before being sent to domestic or export customers. The layout allows for the removal of internal forklift usage, an important employee safety initiative.

Holden has employed leading environmental practices, including regulated temperature control and mist extraction for employees as well as modern recycling techniques.

The $400 million investment is part of Holden's $2 billion capital program in Australia between 2001 and 2006. It also includes a range of upgrades totalling $408 million in the general assembly area of Holden's vehicle manufacturing operations in Elizabeth, South Australia.