Car giant Jaguar Land Rover is to invest £355 million to build low-emission engines in the UK, creating up to 750 jobs, the company has announced.
The new facility will be based at a business park near Wolverhampton in the Midlands, with work due to start early next year.
"We expect the engine manufacturing facility to create up to 750 highly-skilled engineering and manufacturing posts at Jaguar Land Rover, along with hundreds more highly-skilled manufacturing jobs in the supply chain and the wider UK economy," said Dr Ralf Speth, chief executive of Jaguar Land Rover.
Dr Speth said the new four-cylinder engines will increase JLR's capability to offer high-performance engines while ensuring continued significant reductions in vehicle emissions. He paid tribute to the "strong support" from the Government, trade unions, local MPs, local authorities and the company's own employees.
Len McCluskey, general secretary of the Unite union, said: "This fantastic news is the culmination of 18 months' hard work by the workforce and Unite, the local council and local MP Jack Dromey, working with Jaguar to bring this plant to the Midlands. A forward-thinking approach and total determination by the local unions to bring new work to the UK ensured a competitive labour agreement could be reached to secure this new plant."
JLR has enjoyed a dramatic turnaround in fortunes in recent years, boosted by strong demand from emerging markets such as China and Russia. The company reported pre-tax profits of £1.1 billion in the year to March 31, up from £14.6 million the previous year. Revenues increased 51% to £9.9 billion.
Tata Motors, controlled by billionaire Ratan Tata, bought the company from Ford for £1.5 billion in June 2008. But soon after the acquisition, the global car market went into reverse, pushing the company into a loss, and it said it was considering closing one of its production plants in the West Midlands in a bid to cut costs.
As the car market began to recover, the management last year performed a U-turn and said all three plants - at Castle Bromwich and Solihull in the West Midlands and Halewood on Merseyside - would stay open.
With sales showing growth, the company announced an increase in investment and said it would create an additional 1,500 jobs at its Halewood plant. The company has already hired 3,000 staff this year, including a record 350 graduates, and now employs almost 21,000 people in the UK.
JLR's engines are currently supplied by Ford from plants including Bridgend and Dagenham in the UK. However, the car maker wants to take greater control of its engine production as sales boom in Asia. It is also considering building a plant in India.