As part of the $2.5-billion Beacon Project unveiled yesterday, GM Canada will contribute money to eight universities and create research chairs at several of them to train automotive engineers, Mr. Grimaldi said.

“The partnerships comprehended in the Beacon Project are critical to successfully compete in an industry going through a challenging global transformation with production overcapacity,” he told a packed news conference alongside the assembly line at GM Canada's Oshawa No. 1 car assembly plant.

The $2.5-billion investment will create 500 new jobs, including 400 at the auto maker's joint venture assembly plant in Ingersoll, Ont., Cami Automotive Inc., which will receive $500-million.

Cami will begin assembling the new Pontiac Torrent sport utility vehicle this fall.

Suzuki Motor Co. Ltd., GM's partner in the joint venture, will begin producing another SUV at Cami next year, industry sources have said.

The Ontario government is contributing $235-million to the GM project, which includes investments that will turn its other car assembly plant in Oshawa into a flexible manufacturing facility. Ottawa pitched in an additional $200-million.

Flexible manufacturing allows an auto maker to react much more quickly to changes in market demand and reduces the investment needed in future generations of vehicles, Mr. Grimaldi said.

The Ontario investment — from a $500-million fund set up last year to lure auto makers — shows the province is determined to support the auto industry, Premier Dalton McGuinty and Economic Development Minister Joe Cordiano told reporters.

“We're sending a signal out far and wide that we want to do business,” Mr. McGuinty said.

“The purpose of that fund is not to sit in a bank account and acquire interest.”

He confirmed that the province is in discussions with Toyota Motor Corp. about building its seventh North American assembly plant in Ontario.

The investment by GM in new research and development plus the money being funnelled to universities represents a major shift in the way auto makers have traditionally reinvested in their plants.

It's that component that particularly gratified university officials, many government players and others yesterday.

“The future of the Canadian automotive sector is the six inches between our ears,” said industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. in Richmond Hill, Ont.

“GM recognized this and is investing millions moving up the intellectual curve.”

While governments and Canadian Auto Workers economist Jim Stanford lauded GM for the investment, a CAW official in St. Catharines, Ont., criticized the announcement.

Doug Orr, plant chairman at GM's St. Catharines engine plant, said the $23-million earmarked for that facility was spent one year ago.

Mr. Orr also slammed the timing of the announcement, saying that on Tuesday, union leaders in St. Catharines were informed of the permanent layoff of more than 100 workers expected to take place in June and September.

GM spokesman Stew Low said about 185 jobs will be cut at the plant, some through layoffs and some through an enhanced retirement package.