General Motors has made an announcement that it will spend $200 million to build an engine and components plant in Joinville City, Brazil. Construction is scheduled to begin in the fourth quarter of 2009. Once up and running, the plant will employ 500 workers and generate 1,300 indirect jobs according to GM.

“The decision to build a new engine plant in Brazil is essential to our ability to expand vehicle production capacity throughout the Mercosur Region,” said Jaime Ardila, President of General Motors Brazil and Mercosur. Mercosur is a free-trade zone created by Argentina, Brazil, Paraguay and Uruguay.

The new plant will be located about 320 miles south of Sao Paulo, Brazil. When it’s completed the plant will have the capacity to build 120,000 engines and 50,000 cylinder heads annually.

Last year, GM spent $500 million on its Brazilian unit to develop small cars and to expand its product development center there. GM also designated Brazil as its lead center for designing mid-sized trucks. Brazil is a great source for cheap R&D for GM. Also it helps them develop automotive components and vehicles for emerging markets.

“GM will play that global engineering talent as it needs it, and it recognizes the huge amount of talent we have,” Maureen Kempston Darkes, GM’s group vice president and president of Latin America, Africa and Middle East, said in an interview with Automotive News. “When you’ve been designated the lead of mid-sized trucks, that also opens up new and important opportunities, so watch for that to come.”