The company is expanding its Lucas SEI electrical wiring division to cope with increased demand from Rover Group. Production is due to start in July.
SEI is a joint venture with Sumitomo Electric Industries of Japan, formed in 1990 and now employing 2,900 at three sites in South Wales and Staffordshire.
Lucas said the 50,000 sq ft factory, based at Houghton-le-Spring, was expected to create the jobs within 12 to 18 months. One motor industry analyst said that 650 jobs was a conservative estimate. 'Demand projections suggest that total employment could rise above this,' he said.
The factory is close to Nissan's UK car production plant, and although it has no current contracts with SEI, the Japanese company confirmed there were talks.
Dr Malcolm Bennett, a director of SEI, said: 'Due to the expansion in demand from Rover on our contracts for the successful 200/400 and 600 models an additional facility is required.' SEI also supplies Honda, Toyota and Jaguar.
A Lucas spokesman said the current Rover contracts were mostly new and would last two or three more years.
Rover lifted production 26 per cent year-on-year in the first quarter, largely through the introduction of the 600 executive range.Reuse content