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General Motors Co. will expand its engineering and software development staff in Ontario, the latest investment in Detroit's spending spree aimed at keeping up with Silicon Valley.

The move is another vote of confidence in Ontario's tech-industry credentials, which have been significantly bolstered by the University of Waterloo's efforts to become a magnet for tech recruiters. GM has long operated in Ontario, building cars and employing roughly 9,000 people at or in cities near its Oshawa headquarters for manufacturing and other business activities.

GM said Friday it is adding 700 jobs to its Canadian engineering center to increase Oshawa's role in the auto maker's race to develop autonomous and alternative-fuel vehicles capable of chasing Tesla Motors Inc. or Google Inc. GM has spent more than $1 billion this year investing in ride-sharing firm Lyft Inc. and buying autonomous-vehicle developer Cruise Automation Inc.

The No.1 U.S. auto maker estimates it will hire 27,000 salaried workers in the next five years to expand and replace retiring employees, 45% of which will be tech jobs. GM is spending $1 billion to make over its technical hub in Warren, Mich.

GM's rivals in the auto industry and a crop of tech companies—ranging from Apple Inc. to a spate of new startups—are also conducting an automotive hiring spree. Ford Motor Co. recently invested more than $100 million to in a software company to acquire needed skills, a move that mirrors recent acquisitions by Toyota Motor Co.

At the same time, GM is also investing billions of dollars to advance luxury vehicles and create more sophisticated entry-level products for emerging markets. Bolstered by strong profits in North America amid record sales and solid demand for light trucks, the company has announced substantial investments for Chinese operations, Cadillac and electrification since Chief Executive Mary Barra took the helm in 2014.

In a recent interview, Ms. Barra cited the nearby University of Waterloo as a source of top math and science graduates who would otherwise head to Silicon Valley. The school's graduates are the second-most-frequently hired in Silicon Valley behind students from University of California, Berkeley, according to a 2015 report by Startup Compass Inc., which tracks small and midsize businesses.

"GM's decision to develop next-generation vehicle technologies in Ontario is a vote of confidence in our province's highly skilled workers and strength as an innovation hub," Kathleen Wynne, premier of Ontario, said in a statement. In an interview, Unifor President Jerry Dias said GM's move sends a positive signal ahead of labor talks slated for later this year.

Unifor represents Canadian auto workers. Ontario is home to several assembly plants, including Toyota and Ford factories, but some of those operations are under pressure amid rising labor costs.

GM's Oshawa plant in particular has faced uncertainty since the company announced last year that it would move its Camaro sports car production to Lansing. The other products made there are either set to move or be phased out in the coming years.

Mr. Dias said GM's Friday hiring announcement "is a step in the right direction…not a sign of a company looking to exit the country. So I'm feeling positive of what that means for contract negotiations."

Mr. Dias said he is confident the two sides can reach an agreement, though he said it would be difficult. The priority for Unifor is landing a new product at the Oshawa assembly plant to replace the Camaro and its 100,000 units of annual production, he said.

Christina Rogers contributed to this article

Write to Gautham Nagesh at gautham.nagesh@wsj.com

(END) Dow Jones Newswires

June 10, 2016 10:45 ET (14:45 GMT)

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