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SAPA Transmission Inc. said Tuesday it will break ground on a new production facility this fall in Shelby Township, where it will locate its North American headquarters.

The Michigan Strategic Fund approved on Tuesday a $2.676 million grant for the project. SAPA, the U.S. subsidiary of SAPA Group, a Spanish defense industry manufacturing company, said it plans to invest $40.1 million into Michigan, creating 223 new engineering, manufacturing and administrative jobs over the next five years. The company builds combat-vehicle transmissions.

SAPA, according to the Michigan Economic Development Corp., chose Michigan for its new headquarters over competing locations in Pennsylvania and North and South Carolina.

Deniz Balta, SAPA Transmission’s vice president, told The Detroit News that the company chose Shelby Township to be close to its largest customers, including BAE Systems, General Dynamics Corp. and the U.S. Army's Tank Automotive Research Development and Engineering Center. Other positives, Balta said, were the high-quality engineering workforce and the region's flexible industrial capabilities. Balta said SAPA hopes to leverage local production facilities to help keep costs low.

"For combat vehicles, 400 units is fairly good production," Balta said. "That's nothing for automotive. There's plenty of low-volume, high-quality, extremely advanced production facilities, which will fit our needs perfectly."

The new 110,000-square-foot production facility is expected to open in January 2020 and produce 150 advanced combat-vehicle transmissions per year. By 2021, the company hopes to produce annually 400 units. The company did not disclose the exact location.

SAPA began leasing in May what it says is one of the largest research and development center for combat vehicle transmissions in the country. The company plans to assemble and test its transmissions for tracked and wheeled vehicles in the 48,000-square-foot Shelby Township facility. Prior to that, all production happened in Spain.

"It's huge for us," Balta said of the new headquarters. "The decision to open a full production center in the U.S. will allow us to enter this market in a meaningful way and provide the type of support our customers expect."

bnoble@detroitnews.com

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