Ford and Mazda’s joint venture US plant, AutoAlliance International, is to invest $US644 million in new machinery and equipment to expand output at its Flat Rock assembly plant, according to the Detroit News.

The newspaper said the Michigan Economic Development Corporation has awarded AutoAlliance a 20-year single-business-tax credit of $94.9 million to encourage the company to expand and the city of Flat Rock recently approved a $31 million, 12-year tax abatement.

AutoAlliance president Phil Spender told the Detroit News that the factory would begin producing the new Mazda6 sports sedan this autumn but declined to reveal other future vehicles that may be built at the plant though the new investment is expected to make the factory more flexible to add other models.

According to the Detroit News, the Flat Rock factory, opened in 1987 to build the Mazda MX-6 and Ford Probe, employs 1,925 workers and could add up to 1,400 jobs if demand for new models grows.

The newspaper, citing analysts, said that Ford is also studying whether to build the Mustang at the plant.

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Flat Rock currently builds the Mazda 626 sedan, which will be replaced by the Mazda6, and the Mercury Cougar coupe, which Ford plans to discontinue after the 2002 model year because of weak sales, the Detroit News said.

With demand for the Cougar and other small sports coupes waning and growing competition in the mid-size US car market, the factory has struggled to boost output in recent years, the Detroit News said, adding that 2001 production fell about 33% to 71,723 units, making Flat Rock one of the least efficient car factories in North America.

The company had been considering another location in North America to expand its vehicle line, but elected to stay in Flat Rock, given the public incentives, Spender told the Detroit News.