Contractors in Howard and Grant counties are at the epicenter of the unpaid bills from the halted construction of the Getrag transmission plant in Tipton County, according to a state lawmaker.

Of the $45 million owed to Indiana contractors, more than half is owed to contractors from the two counties, said Rep. Joe Pearson, D-Hartford City.

Pearson is working on several options to provide help in the form of loans to the contractors so that they can continue in business until the Getrag Transmission bankruptcy is resolved.

Chrysler and Getrag announced plans in 2007 for the construction of the $530 million plant that would have employed 1,200 people. Last year, because of a financial dispute, the two sides have filed lawsuits against each other, and Getrag Transmission halted construction last year and filed for Chapter 11 bankruptcy protection.

Pearson has included in the proposed state budget a line item for the Indiana Economic Development Corp. to provide loans to the companies so they can remain in business.

The impact of the Getrag Transmission bankruptcy is being felt by vendors and suppliers around the state, he said. Pearson said lawmakers from all the impacted areas are being asked to join in the effort.

“When I started looking at the losses, I wanted to see what the state could do to help them through the process,” Pearson said. “We have to keep those companies viable. There is an obligation for the state to step in.”

Pearson said the companies are doing what they can through the bankruptcy process but noted it could be years before any funds are received.

Options being considered are loans through the U.S. Department of Agriculture Rural Development program and the Small Business Administration, which could lend up to $2 million, he said.

Pearson said another option is working with Chrysler and the federal stimulus funds.

“The companies are not asking for free money,” he said. “They want to be able to borrow money or get their accounts receivable paid.”

Pearson said he is working with Sen. Jim Buck, R-Kokomo, on having the state help the contractors obtain bonds so they can bid on future work.

BMD Contractors is hoping to survive and be in business when the Getrag Transmission bankruptcy is resolved, according to Jim Miller.

“They knew in July that they didn’t have money to pay us and kept us working for 12 more weeks,” Miller said. “Now we’re facing going out of business and owing lots of money through no fault of our own.”

Miller said he paid 100 people for working 60 hours a week for 10 weeks, which drained BMD of cash reserves. He said the weekly payroll was $250,000.

Additionally, the company ordered $1 million in change orders, and while the work was authorized, the paperwork to bill for the work was not, he said.

BMD has paid the smaller vendors and subcontractors and told the larger vendors about the situation with Getrag.

“This has reduced my capacity to do much at all,” Miller said. “I am trying to borrow through the Small Business Administration to keep going.

“Help with cash flow would help more than anything,” he said.

Jerry Albrecht, president of Morehead Electric in Marion, said five companies from Howard and Grant county are working together to resolve the problem.

Morehead Electric is owed $8.2 million.

“We owe distributors, suppliers and subcontractors,” Albrecht said. “The economic flow is down. Paying the vendors is critical.”

Morehead Electric has done work in the past in all the Chrysler plants in Kokomo, and Albrecht said they have been wonderful to work for.

He said the amounts owed to the Indiana contractors are considered secure and should be paid in the future.

“We need the funds to flow directly to the contractors, so we can keep going,” Albrecht said. “Any help would be appreciated.”

Albrecht and Miller both said the inability to secure bonding is a problem when it comes to securing additional work.

Normally when a company bids on a contract, it is required to post a performance bond that assures the work will be completed in a satisfactory manner.

Ken de la Bastide can be reached at (765) 454 -8580 or via e-mail at ken.delabastide@kokomotribune.com