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Oakland County, Mich., Executive L. Brooks Patterson said the decision was "a feather in the cap for the Orion (Township) plant and the good men and women who work there."

GM filed for bankruptcy June 1 and had said the plant was on stand-by status.

The plant employs 3,400 workers and makes Pontiac vehicles, which GM plans to phase out of production.

The new small cars mean "1,200 jobs and a significant boost to the local and state economy", Patterson told The Detroit News.

President of GM North America Troy Clarke said "GM will be the only automaker, foreign or domestic, to build small cars in the U.S. and we believe Orion Assembly and Pontiac Stamping are well suited to deliver a high-quality, fuel-efficient car."

After a re-fitting, the plant is expected to produce about 160,000 small and compact cars, which Clarke called "one of the fastest-growing segments in both the United States and around the world."

Production of the new models could start in 2011, the News reported.

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