Ford plans to create 1,200 jobs in Michigan

* Plant upgrades mean 1,200 Michigan jobs over next 3 yrs

* State of Michigan tax relief for Ford near $400 million

* 300 engineering salaried jobs to be created

* Ford unsure pay scale mix for 900 hourly workers

 Ford Motor Co (F.N) on Monday announced plans to spend $850 million upgrading at least four Michigan plants to make more fuel-efficient vehicles and to hire 1,200 workers, spurred by $400 million in tax relief from the state of Michigan.

The investment by the automaker is dependent on the adoption by the state expected later this week of the job-retention tax breaks for the automaker, said Ford President of the Americas Mark Fields.

"Investing in American manufacturing is a priority for Ford and that is what today is all about," said Fields at the automaker's Van Dyke Transmission Plant in suburban Detroit.

Fields said the upgrades will help Ford to make a wide range of fuel-efficient cars and trucks. All of the automaker's passenger vehicles will include six-speed transmissions, such as the ones to be made at the Van Dyke plant, by 2013.

Michigan Gov. Jennifer Granholm, who appeared at the plant alongside Fields, said the tax breaks are as necessary for the recovery of the U.S. auto and wider manufacturing industry as were 2009 federal government bailouts of General Motors Co (GM.N) [GM.UL] and Chrysler.

"The $850 Ford is investing means that jobs are going to be here in the future," said Granholm, the Democrat who is in the last weeks of her eight-year term.

GM and Chrysler underwent government-supported bankruptcies and restructuring in 2009. Chrysler is now under the management control of Fiat (FIA.MI), and GM is nearing an initial public offering.

Ford was the only one out of three major U.S. automakers to avoid bankruptcy.

Granholm said further announcements on tax breaks for keeping automaker jobs in Michigan will come later this week. She did not elaborate.

Michigan already had one of the highest unemployment rates among U.S. states before a credit crisis and economic downturn deeply cut auto sales beginning in 2008.

Fields said this month's auto sales indicate the U.S. auto industry is showing signs of recovery.

 Of the 1,200 Ford hires, about 300 of them will be salaried engineers in newly created positions, Fields said. Of the 900 hourly workers, about 200 Ford workers on temporary leave have first rights to the jobs.

As the hourly positions will open over a three-year span beginning in 2011, there is no way to say how many will be filled by laid off union workers, said a Ford spokeswoman.

Fields said it is too early to say how many of the hourly workers will be hired at the new $14 per hour rate agreed by the United Auto Workers and the automaker for new hires. That is about half the average rate of pay for veteran UAW workers.

In addition to the Van Dyke plant in Sterling Heights, the $850 million Ford investment will fund upgrades at Michigan's Dearborn Truck Plant, the Livonia Transmission plant and the Sterling Axle plant, Fields said.

The package of tax breaks for Ford totals $400 million, which includes several existing state incentives.

Ford previously announced plans to spend $950 million to transform the Michigan Assembly Plant in Wayne, also near Detroit, to build the new Focus sedan due in showrooms in early 2011. It will also make the next generation of Ford's hybrid and plug-in hybrid vehicles. The plant formerly made large sport utility vehicles.