The announcement was long-awaited and comes more than a year after the company stated it was building a business case for an up to $445-million investment in a six-speed transmission for rear-wheel drive vehicles. That business case relied on a working agreement with local CAW workers, as well as support from the provincial and federal levels of government.

Over the weekend, letters of agreement in principle were exchanged between Industry Minister Jim Prentice and the company outlining the deal, which amended a deal reached in 2005, when GM announced its $2.5-billion Beacon Project. That agreement included $435 million in interest-free loans in exchange for a minimum job level at its Ontario plants.

Since then much has changed, including a rapidly dropping demand for many of GM's products, particularly its larger trucks and SUVs, due to rising gas prices and a slowing economy.

The company's recent announcement of a truck plant closure in Oshawa would have led to the company to failing to meet the minimum job level, and as a result it would have had to pay back the loans earlier.

In the letter of agreement to GM of Canada president and managing director Arturo S. Elias, Prentice stated the new investment means the federal government will not "trigger the early repayment provisions of the Beacon Agreement."

A news release from Ontario Minister of Economic Development and Trade Sandra Pupatello announced similar provisions, saying "it allows GM the flexibility to make this new investment and earn their way back into compliance."

It's expected the agreement will secure up to 350 jobs at the plant.

GM will also built a hybrid mid-sized vehicle at its Oshawa car plant and spend $40 million on engineering facilities to focus on environmental technology.

The announcement came days after the federal government said it would contribute $80 million towards Ford's plant in Windsor. The timing of the move just days before the election was criticized as "cynical" by CAW's national leadership.

However, CAW local 199 president Wayne Gates said while the timing of the Windsor announcement may have been questionable, in St. Catharines it was a result of a 14-month effort to reach an agreement. He said much of the work had been completed by June but came off the rails as the market conditions changed.

He said the investment wouldn't have gone forward without government support.

"At the end of the day, it's a substantial amount of money from the two levels of government that allows the six-speed transmission product to be done in St. Catharines."

Gates said, though, the election may have added to the urgency of the announcement.

- With files from Torstar News Services