Mazda plans to build an engine machining factory at its new assembly plant in Salamanca, Mexico.

The engine facility will produce Skyactiv mills for vehicles built at the factory, including the Mazda3 and Mazda2. The plant will build 230,000 engines annually with operations expected to begin next year.

Mazda, and its joint-venture partner Sumitomo, is investing $120 million for the engine plant, which will employ about 100 people.

Construction of the vehicle and engine assembly buildings is complete, and preparations are being made for the start of operations in fourth-quarter 2014.

Mazda says building engines in Mexico and increasing the number of parts sourced locally will help it withstand exchange rate fluctuations.