From Buffalonews.com

General Motors Corp.’s Town of Tonawanda engine plant is vying to make a new diesel engine, company officials said Monday, a move that would broaden the plant’s base of business as gasoline prices rise.

Landing the engine would not add jobs, but it would secure 150 positions and heighten the plant’s importance within GM.

“Tonawanda put up its hand,” GM spokeswoman Mary Ann Brown said. “We do have [vacant] space — we’d be happy to do that product.”

GM plans a 4.5-liter diesel that would be available in some pickups and SUVs after 2009. Making the diesel engine would be a first for the plant on River Road, which makes gasoline engines for GM cars and trucks.

The diesel would broaden the scope of the $300 million expansion that the automaker announced in January for its 1,860-job factory. That project will build eight-cylinder gasoline engines for future luxury cars.

Production of the gasoline engine is scheduled to begin in 2008. The new diesel would start production in October 2009, if the Powertrain Division plant is selected. Brown said she doesn’t know how many other GM plants are bidding for the new work.

The Erie County Industrial Development Agency approved Monday an additional $350,000 in sales tax savings linked to the possible expansion, said Alfred Culliton, the agency’s chief financial officer.

George Schneider, GM’s regional tax manager, told IDA officials that the additional sales tax break would put the Tonawanda plant in a better position to win the additional investment from GM.

“We’re in an extremely competitive environment,” he said.

IDA officials said the total investment associated with the new production line would be around $77 million. Brown, of GM, put the investment at $88 million.

At an expected production of 200 engines per shift, the diesel would be a relatively small product for Tonawanda but one with implications for the site’s future.

With gasoline prices topping $ 3 a gallon and approaching $4 in parts of the country, diesel engines are gaining more attention as a way to boost fuel economy.

“It’s really important to get out in front on some of these alternative fuels,” Schneider said.

Peter Masich, the president of Local 774, United Auto Workers, at Tonawanda, said winning the diesel would protect the factory’s job base at a time when GM and other automakers are paring their work forces.

“Unfortunately, because of the environment of the auto industry, we’re not getting new employment — we’re trying to retain employment,” he said. “These are good-paying jobs that will help out the community.”

Culliton said that securing additional investment and broadening the product line would play an important role in anchoring the plant’s position within GM at a time when the automaker is shrinking.

“If they lose a little bit of the operation, it has a cascade effect,” he said.

When GM won $5 million in state incentives for the original expansion of the engine plant in January, the company committed to retaining at least 1,350 full-time jobs over the next five years. The 150 existing jobs covered by the new diesel engine line would increase that commitment to 1,500, Culliton said.

A spokeswoman for Empire State Development Corp. wouldn’t say whether the state is considering additional support for the diesel work.

“We have an ongoing relationship with [GM],” spokeswoman Ann Marie Mannino said. “We are always open to working with them on future or existing projects.”

GM and other automakers are planning diesel engines for light trucks in advance of tighter federal fuel economy standards expected in 2011.

“Obviously, diesel is a good alternative — you get a 25 to 30 percent increase in efficiency,” said Paul Lacy, a research manager with analyst Global Insight in Troy, Mich.

Once linked with sooty, high-sulfur exhaust, diesel fuel for cars and trucks must meet higher environmental standards under rules that began to take effect last year.

Whether diesel trucks will appeal to buyers depends on fuel prices and on the extra cost of the vehicle, Lacy said. The U.S. average price for diesel is $2.80 a gallon, 41 cents less than gas, according to the U.S. Energy Information Administration. In the Buffalo Niagara region Monday, a gallon of diesel averaged $3.01, compared with $3.11 for a gallon of regular gas, according to the AAA of Western and Central New York.

GM has discussed plans for a diesel that would be available in some full-size pickup trucks and SUVs. The planned engine would fit into the spot reserved for a gasoline engine but with 25 percent better fuel efficiency.

“It’s not just a quick add-on — it’s a pretty significant amount of money,” Lacy said. Prices for commercial diesel trucks are thousands of dollars higher than comparable gasburners, he said.

GM makes a 6.6-liter diesel at a plant in Ohio for commercial- duty vans and pickups, through a joint venture with Isuzu.