Volkswagen has officially announced plans to construct a new powerplant facility in Mexico. Designed to crank out a total of 330,000 engines a year, the Silao plant will cost the company $550 million to build and will bring around 700 jobs to the area. VW says that the new factory is key to its strategy for expansion, and it will help provide engine components for both the new Jetta, which is built in Puebla, Mexico and the company's New Midsize Sedan (NMS), which is slated to be built in the company's Chattanooga, Tennessee plant starting in 2011.

The new facility also underscores the VW decision to redouble its focus on the American market. The manufacturer says that the new plant is part of its plan to create vehicles that are more tailored to American tastes in a quest to go after a larger market share.

In addition to having an ample work force, the 60-hectacre piece of land already features transportation options and had been previously developed. The full press release can be found after the jump.

[Source: VW]


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VOLKSWAGEN GROUP EXPANDS NORTH AMERICAN INVESTMENT WITH NEW ENGINE PLANT

HERNDON, Va. / MEXICO CITY, Sept. 22, 2010 - The Volkswagen Group announced today that it will build a new engine plant in Silao, Mexico as part of its long-term expansion strategy in North America. Beginning in 2013, the new plant in Silao will supply the latest generation of engines to the vehicle plants in Chattanooga, Tenn. and Puebla, Mexico.

"This investment is yet another signal of the importance of North America to the Volkswagen Group," said Jonathan Browning, President and CEO, Volkswagen Group of America, Inc. "The current expansion of capacity of the plant in Puebla, the upcoming start of production in Chattanooga, as well as the opening of the new engine plant in Silao, clearly shows Volkswagen's commitment to winning in this market."

Strengthening the market position of the Volkswagen Group in North America is an essential component of the company's global expansion strategy. Volkswagen Group is planning sales of one million vehicles in the U.S. annually by 2018. The core element of this strategy is vehicles tailored to the demands of U.S. customers, such as the all-new Jetta and the New Midsize Sedan (NMS). The all-new Jetta is built in Puebla, Mexico and the NMS will be produced in Chattanooga, Tenn. beginning next year. Both vehicles have a high degree of localization.

The new engine plant is designed for an annual capacity of 330,000 engines. The investment volume for the development of the new engine as well as for building the new site comes to a total of $550 million. Volkswagen will create approximately 700 jobs over the medium term on site in Silao. In addition, further jobs will arise in the region with suppliers and in the area of logistics. The Volkswagen Group selected Silao as the new engine site because – in addition to having a qualified work force and a developed supplier structure – the region offers a site of 60 hectares, which is already developed and has an existing transport infrastructure.

"North America is and remains one of the biggest and most important markets for the automotive industry," explained Prof. Dr. Jochem Heizmann, member of the Volkswagen Aktiengesellschaft Board of Management for Group Production.

Currently, the Volkswagen Jetta, Golf Estate and the New Beetle are produced in Puebla, Mexico. Production of the NMS will begin in Chattanooga in 2011.