General Motors Co. will add light-duty pickup production to its Flint, MI, assembly plant, signaling the auto maker’s confidence in a rebound for the struggling truck market and its razor-thin capacity for crew-cab models of the Chevrolet Silverado.

GM plans to invest $21 million in the Flint facility, with renovations slated to begin in the fourth quarter and production launch scheduled for mid-2010.

The Flint plant becomes GM’s sole source of heavy-duty crew-cab production next month when the auto maker’s Pontiac, MI, assembly operation goes dark. Flint also builds heavy-duty, regular-cab trucks.

“It appears Flint will become the center of pickup production for GM,” says Erich Merkle, an industry analyst and president of Autoconomy in Grand Rapids, MI.

With GM also shuttering its Oshawa, ON, Canada, truck plant earlier this year, the auto maker finds itself lean on light-duty capacity, especially for the crew-cab models planned for Flint.

Oshawa built light-duty crew- and extended-cab pickups with a capacity of 340,000 vehicles on three shifts. In 2008, it ran as a 2-shift operation, with capacity for 240,000 units – the same as when it shut down in May.

Flint and Silao, Mexico, now will serve as GM’s sole producers of crew-cab pickups.

Since Flint will build light- and heavy-duty models on the same line, it will not add workers to its current payroll of 1,767 employees. Silao also builds both pickups on the same line, as well as hybrid models.

“This investment in light-duty crew-cab capability enhances Flint Assembly’s manufacturing flexibility and future competitiveness,” says Larry Zahner, manager-GM Manufacturing, in a statement.

The auto maker sources light-duty regular- and extended-cab pickups from its Fort-Wayne, IN, assembly plant, which will add heavy-duty, extended-cab production in November.

Crew-cab pickups are the most popular body style in the U.S. light-duty-pickup segment. For the ’09 model year, auto makers built 243,336 crew cab models, or 40% of the 606,572 pickups built, according to the latest Ward’s data. For ’08, 54% of the 2,417,290 pickups built were crew cabs.

However, pickup sales have plummeted. After commanding 18.8% of the new-vehicle market in their heyday of 2005, light-duty pickups now hold 13.2% of sales.

Much of the downturn can be blamed on recreational users exiting the market during the run-up in gasoline prices last year. But record-low new-home construction during the recession has taken its toll, as well.

The home-construction market now appears to be gaining momentum. Last week, the U.S. Commerce Dept. reported a 1.5% uptick in housing starts in August, to an adjusted annual rate of 598,000.

The increase was the highest since November 2008, although well off like-2008’s rate of 849,000. Building permits also reached their highest levels in nine months, the government said.

“Pickups will come back,” Merkle tells Ward’s. “Not to the highs of 2005, but there are signs the housing market is returning on a sequential basis. And as housing begins to improve and home inventories fall, new construction will increase and that will drive pickup sales.

“It has to, the correlation is too strong,” he adds.

GM’s restructuring plan calls for the auto maker to downsize its U.S. powertrain, stamping and assembly operations to 31 sites by 2012, from 47 in 2008.

GM’s light-truck capacity has fallen 34.8% over the last two years, compared with a 20.2% decline in the auto maker’s overall capacity, to 3.8 million units for 2009 from 5.4 million in 2007, Ward’s data shows.