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March 1, 2013

Chrysler announces creation of 1,250 jobs

Chrysler announced Thursday it was investing $374 million and adding 1,250 jobs in Kokomo and Tipton to increase its production of fuel-efficient transmissions.

Once production begins on the new nine-speed transmissions, this area will house the largest transmission installation in the world, Chrysler CEO Sergio Marchionne told Chrysler employees, area politicians and members of the media Thursday morning.

“The decision to make these investments can be traced all the way back to those first weeks after Chrysler began operations as a new entity in June 2009, at a time when we faced widespread skepticism about our viability,” Marchionne said. “One of the key decisions we had to make was whether to simply buy a line of technologically advanced powertrains from a supplier or to build them ourselves...It was clear that there was a burning desire within our own house to take as much control as possible over our own destiny.”

The path to Thursday’s announcement was not an easy one, though.

United Auto Workers Regional Director Ken Lortz said he clearly remembers April 30, 2009 — the day Chrysler filed for bankruptcy. The company’s future was uncertain.

Lortz thanked President Barack Obama for the faith he showed in the automotive industry by issuing a loan to Chrysler.

Chrysler employees and politicians alike erupted in applause. Gov. Mike Pence stood out as the only politician on the dais at Chrysler who did not clap.

He later explained his position on the government bailout.

“My position never was to oppose doing anything,” he said. “I was interested in giving companies a hand up and not a hand out. Chrysler went through a bankruptcy. What we were recommending were other ways to do it.”

Chrysler may not have survived without that bailout, though, said David Cole, chairman emeritus of the Center for Automotive Research.

“Chrysler could have failed,” he said. “They were in danger of disappearing completely. They survived by the skin of their teeth.”

But the company has survived to the point, now, where in some ways it is keeping Fiat afloat, Cole said.

He said Chrysler has made good decisions, including its decision to manufacture eight- and nine-speed transmissions.

“Everybody is moving to more speed transmissions,” he said.

Marchionne said with more gears, these transmissions can run more often in their optimal speed ranges, providing better fuel economy and vehicle performance.

And at least temporarily, Chrysler will be the only automotive manufacturer producing these transmissions. Cole said that should give them a competitive edge in the market.

“But victory is only temporary in this world,” he said.

Ford and General Motors are working together on eight- and nine-speed transmissions for their vehicles, he said. Cole expects those to be finished in the next year or two.

Still, Chrysler’s announcement is a big deal, Cole said.

“We’re seeing jobs come back,” he said. “That tells you things are getting better.”

Chrysler’s investment will bring 850 jobs to Tipton and an additional 400 to Kokomo.

It will take Chrysler’s employment in north-central Indiana from 6,100 to 7,350 — a 20.4 percent increase in its workforce.

Kokomo Mayor Greg Goodnight said this will make Chrysler the state’s biggest private company north of Indianapolis.

“A short time ago, people thought Chrysler could not be saved,” Goodnight said.

Now, the company has made one of the largest economic development announcements in north-central Indiana history, he said.

Pence agreed. Being home to the largest transmission-manufacturing facilities in the world is a source of pride, he said.

“Our past and our future is in manufacturing in the state of Indiana,” he said. “Indiana is many things, but at its core, we make things and we grow things.”

Chrysler will receive help from the state in exchange for its investment.

The Indiana Economic Development Corporation offered Chrysler up to $11.5 million in conditional tax credits and up to $200,000 in training grants. Those tax-credits are performance-based, so until Hoosiers are hired, the company is not eligible to claim the incentives.

The cities of Kokomo and Tipton offered additional tax abatements.

Chrysler is spending $212 million of its own money for additional tooling and equipment to produce the eight- and nine-speed transmissions at Kokomo Transmission, Kokomo Casting and Indiana Transmission I plants, officials said.

Work on the facilities is scheduled to begin in the second quarter of 2013, with equipment and tooling to be installed in the fourth quarter.

The Kokomo plants are already starting to build the eight-speed transmissions and will build the nine-speed until work at the Tipton site is complete.

Marchionne said the eight-speed transmission is already appearing in the Jeep Grand Cherokee and rear-wheel-drive cars like the Chrysler 300 and Dodge Charger.

With Thursday’s announcement, Chrysler said it has now invested more than $1.6 billion in Kokomo.

“These new investments and new jobs are a testament to the determination we all had — management, labor and our workforce — to making the best of the second chance we were given in 2009,” Lortz said.

For more on this story and other local news, subscribe to The Pharos-Tribune eEdition, or our print edition

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