More than half of the increase in production will come from North America, where GM has faced a sharp drop in demand for its gasoline guzzling trucks and sport utility vehicles.

GM said small four-cylinder engines will account for a third of its North American production in 2011, up from 21 percent in 2007.

This will also help GM comply with new legislation requiring all automakers to raise the average fuel economy of vehicles sold in the US market to 35 miles (56 kilometers) per gallon (3.8 liters).

The Bush administration has estimated that retooling for the new standards would cost automakers 100 billion dollars.

The US House of Representatives on Wednesday passed a bill that will offer automakers and suppliers up to 25 billion dollars in guaranteed government loans to help fund the development of "advanced technology vehicles."

The bill is expected to be approved by the senate and President George W. Bush in the coming days.

GM's new plant in Flint, Michigan will begin production in 2010 and will produce a range-extending engine for the plug-in electric Chevrolet Volt alongside a turbo-charged 1.4 liter engine for the Chevrolet Cruze.

Construction on the 349 million dollar facility is expected to begin "immediately" the automaker said. The 552,000 square foot plant will employ about 300 union workers.

GM said it will invest an additional 21 million dollars for vendor tooling to support the new Flint operations.

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