The state Michigan has agreed to give Ford Motor $300m to keep open six of its factories in the state.
The move, which amounts to subsidies of about $23,000 per worker, could help safeguard 13,000 jobs in the state.
In return, Ford has vowed to invest $866m to upgrade the ancient equipment in the plants.
The firm had threatened to go to other neighbouring states, such as Minnesota and Indiana, which had also been prepared to offer subsidies.
Ford's investment will pay for the retooling of its Wayne assembly plant to produce the new 2008 Ford Focus small car and a $200m investment to produce Ford F150 trucks on the old River Rouge site.
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