The Ohio Tax Credit Authority approved a 75 percent reduction in GM's income taxes for up to 15 years to help fund a $317 million expansion of the plant.
GM would have to hire 200 new workers and retain 3,700 existing employees to get the full credits in Lordstown.
The tax credits are a key component of the strategy to get a new product into facility, according to the company.
GM has announced plans to make the new Chevrolet Cruze compact car in Lordstown by 2010. The company said the Cruze would be able to get as many as 45 miles per gallon, nine more miles per gallon than the Cobalt, which is made there now.
GM and other automakers are rushing small cars to the market as quickly as possible. Sales of bigger vehicles have taken a nosedive in the wake of $4-per-gallon gas prices, so companies are cutting shifts and closing plants that make trucks and SUVs.
GM announced that it would cut a 1,000-worker shift at its Moraine, Ohio, SUV plant. The company is also eliminating a shift at its SUV plant in Shreveport, La., putting more than 750 employees out of work. These cutbacks take effect in September.
The Shreveport plant makes the Hummer H3 SUV and the Chevrolet Canyon compact pickup.
Previously, GM said that the Moraine plant and three other North American pickup truck and SUV facilities would close by 2010 as part a permanent shift in consumer preferences to small cars and crossovers.
In addition, GM will slow production of Hummer H2 models at its plant in Indiana and also slow production of full-size SUVs and pickup trucks at its plant in Silao, Mexico.
To get the Lordstown credits, GM promised to maintain operations there for at least 30 years.
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