ORION TOWNSHIP, Mich. (AP) -- Michigan has snatched back a few of its fast-disappearing auto jobs, winning a high-stakes competition with two other states to build General Motors Corp.'s next-generation subcompact car.

The news is a bright spot in an otherwise gloomy Michigan economy that has seen unemployment hit a nation-leading 14.1 percent, lots of housing foreclosures, unpaid furlough days for state workers and uncertainty for thousands of others worried about whether they'll still be getting a paycheck in the months ahead.

"We're delighted," Oakland County Executive L. Brooks Patterson said Thursday after a person briefed on the decision told The Associated Press that GM would keep 1,200 jobs at the retooled midsize car factory in Orion Township, about 40 miles north of Detroit.

U.S. Sen. Debbie Stabenow, D-Mich., confirmed Friday that GM chose the Michigan plant. The automaker also had considered plants in Janesville, Wis., and Spring Hill, Tenn.

A spokesman for Wisconsin Gov. Jim Doyle said GM Manufacturing Vice President Tim Lee told the governor Friday morning that the automaker chose Michigan.

"I am deeply disappointed by GM's decision not to reopen the Janesville plant," Doyle said in a written statement. "Because GM in recent bankruptcy proceedings announced closing seven plants in Michigan and the Orion plant was in current operation, we knew it would be an uphill battle."

GM declined to comment on the decision but spokesman Tom Wilkinson said the automaker planned to make an announcement Friday.

Tony Medrano, an hourly employee at the Orion Township plant, called it "awesome news." The Orion plant now makes the Pontiac G6 and Chevrolet Malibu midsize cars, but the Pontiac brand is being discontinued and the Malibu also is made at factory in Kansas City, Kan. The plant was to go on standby status later this year.

Medrano, who has worked for GM for eight years, was one of the plant workers who accompanied Democratic Michigan Rep. Gary Peters to GM's headquarters last week to deliver letters to company officials pressing for bringing small car production to the factory.

He's unsure about the future of his job because its unclear if the plant will need the same amount of workers as it has now. But he said he still wanted Orion Township to get the chance to build the 160,000 small cars annually.

"We figured the push for this vehicle was more important than our jobs," he said.

Auto workers weren't the only ones heartened by the news. Ron Basar, a 44-year-old engineer with the auto parts supplier Inteva Products, said landing the small car was "quite a relief."

His company faced shutting at least one of its plants had the Orion Township plant closed, and the township would have suffered a big blow to its finances.

"Without that tax base, it would be pretty devastating," he said. "We really need them in the area."

Michigan has lost nearly half its manufacturing jobs since they hit a peak in mid-2000, or more than 450,000 positions. At least half a million workers already are collecting unemployment benefits in the state. So holding onto at least some of the GM jobs it thought it was losing is a major victory.

GM is likely to announce that its Pontiac parts stamping plant will be retooled to make parts for the new car, based on the Chevrolet Spark. About 1,000 jobs could be saved there, more good news for Oakland County.

"We had stiff competition from Tennessee and Wisconsin," Patterson said. "I think the impact of reopening that plant and making the small car here will have a huge long-term effect not just on Oakland County but southeast Michigan and help us address some of the real serious employment issues that we have in this region."

Michigan's win meant a loss for workers hoping GM would reopen the Janesville plant or spare the Spring Hill plant where 2,500 workers will lose their jobs later this year when production of the Chevrolet Traverse crossover vehicle moves to a plant near Lansing.

"I am going to remain optimistic," said Cliff Goff, 53, a longtime employee at Spring Hill who has worked for GM since 1975. "I am a person who believes you have got a great work force. You have a great plant. ... I would think they understand they have a valuable asset there."

Goff said in a telephone interview that a "decision to do nothing with that plant would have a serious impact on our workers and our community."

Michigan, Wisconsin and Tennessee all offered incentive packages to GM in an effort to lure the plant. Tennessee Gov. Phil Bredesen said Thursday that his state's incentive bid was "nothing like" what GM had originally sought.

But Michigan, facing the effects of Chapter 11 bankruptcies at GM and Chrysler LLC and the crumbling of its once-proud car culture, pulled out all the stops to win the plant.

"Clearly we have been creative in fighting for the small car plant," said Liz Boyd, spokeswoman for Democratic Michigan Gov. Jennifer Granholm. "We have a history of going after manufacturing projects and supporting the American automobile industry with incentives."

She declined to give specifics of Michigan's offer. But the state has revamped its business tax to give manufacturers more breaks and has already handed out millions of dollars in tax breaks to the auto industry.

Michigan's congressional delegation also lobbied heavily to bring the small car to the state. All 17 members sent a letter to GM last week saying that the state's economic woes made the project important for Michigan. Peters had begun a "Make it in Michigan!" campaign that collected over 28,000 signatures.

Michigan got more good news Friday, when General Electric Co. said it will open a manufacturing technology center in southeast Michigan, where the May unemployment rate was 14.9 percent.

Still, Michigan is far from being out of the woods. Michigan likely will see its jobless rate increase dramatically when GM closes or idles five plants in the state by the end of 2010, including a truck assembly plant in Pontiac a short distance from the Orion Township factory.

But landing the small car did put a note of optimism in the hot summer air.

"I knew that we had been battered for a while, but I never had any doubt that we'd come back," Patterson said.

Kathy Barks Hoffman reported from Lansing, Mich. Associated Press Writers Tom Krisher and Kimberly S. Johnson in Detroit, Jim Irwin in Birmingham, Mich., Bill Poovey in Chatanooga, Tenn., Todd Richmond in Madison, Wis., Erik Schelzig in Nashville, Tenn., Dan Strumpf in New York and Ken Thomas in Washington, D.C., contributed to this report.