Volkswagen lays foundation for new engine plant in Mexico

Volkswagen may be temporarily closing one plant due to a parts shortage, but they are taking the first steps to open another on the same day.

Volkswagen has officially begun construction of a new engine plant in Silao, Mexico, which is located in the central state of Guanajuato.

The new plant is expected to be completed in 2013, at which point it will play an integral role in supplying engines to what the automaker is calling its then "latest-generation" vehicles that will be produced in plans in Puebla, Mexico, and Chatanooga, Tennessee.

VW's total investment to construct the plant is $550 million, and will create 700 jobs at the plant once it is operational in the medium term. The German automaker also points out that additional auxiliary jobs will be created in the region for suppliers.

Volkswagen produced 435,000 vehicles in Mexico in 2010, and has stated that it aims to reach one million U.S. sales by 2018, which Mexico supplying a great deal of those vehicles.