General Motors will spend about $494m and create around 550 jobs in three US plants to make ‘next generation’ fuel efficient Ecotec engines, the automaker announced at simultaneous events in three states on Thursday.

At Tonawanda, New York, a $425m site investment will add capacity for 370,000 Ecotec engines a year and add 470 jobs at the plant.

A $59m spend will be made at Defiance, Ohio, for precision sand cast cylinder blocks at a rate of 188,000 annually, adding 80 jobs.

GM will also spend $10.5m at its plant in Bay City, Michigan to make connecting rods, creating 15 new jobs .

The investment includes facility renovation, new machinery, equipment and special tooling to support the new engine programme at the three plants.

“GM is transforming its product portfolio to reduce fuel consumption and emissions, and the next generation Ecotec engine is an integral part of that transformation,” said Denise Johnson, vice president – labour relations.

“The investment in state of the art four-cylinder engines is another example of GM’s commitment to replace larger displacement engines with more compact, advanced four cylinder engines that optimise fuel savings and performance. We look forward to working with our union partners at these three plants to make this investment a success.”

GM plans to build two new Ecotec engines. The branding has been used for GM engines in several markets – including the US – for several years and the new versions to be made in the US will have performance and fuel economy improvements.

Cyrrent GM Ecotec technology includes direct injection, variable valve timing and turbocharging.

“Direct fuel injection, a hallmark of many Ecotec engines since 2007, is just now becoming mainstream technology in the industry,” GM claimed.

The current 2.4-litre Ecotec engine with direct injection and variable valve timing used in the Buick LaCrosse, Chevrolet Equinox and GMC Terrain was recently recognized as one of Ward’s Auto World magazine’s 2010 ’10 best engines” for North America based on several factors, including power, fuel efficiency and new technology. The Ecotec line is currently made with two-, 2.2- and 2.4-litre displacements.

GM did not reveal any details of the new engines or say which vehicle models they would be fitted into.

But it announced last August its Buick brand would launch a crossover with plug-in hybrid system in 2011, a year after mainstream models arrived with new, fuel efficient direct injected petrol engines.

In December, it said the upcoming Ohio-built GM-Daewoo-designed Cruze (already on sale in many markets outside North America) was expected to achieve segment-best fuel economy – up to 40 mpg highway – thanks to its new family of small-displacement engines, including a flagship Ecotec 1.4-litre I4 turbo unit which would eventually be built in the US.

“It’s a key engine for a lot of our small and midsized cars,” GM spokesman Tom Wilkinson told AFP on Wednesday.

The automaker has been steadily ramping up production as overall demand improves following the industry’s worst year in decades.

The expansion comes as Toyota – which dethroned GM as the world’s biggest automaker in 2008 – has been forced to halt production and sales of some of its most popular US models as it struggles to cope with a growing number of safety recalls.

“As the market is starting to pick up, we’re finding that we’re short on some of our most popular vehicles… so we’re looking to increase production of those vehicles so we can meet the demand,” Wilkinson said.

“It’s a good situation to be in to have vehicles that customers are very excited about.”

GM’s US production is forecast to reach 650,000 vehicles in the first quarter, a dramatic increase from the 371,000 vehicles built a year earlier.

Worldwide production is forecast to increase to 2m vehicles in the first quarter from 1.33m a year earlier, according to the company.