By Ken de la Bastide and Scott Smith
Chrysler Group LLC unveiled the first step in the process to expand manufacturing capacity in the Kokomo region Monday, an expansion that could add more than 1,200 jobs between Tipton County and Kokomo.
Early in the day, Chrysler officials announced plans to invest $162 million in equipment in the former Getrag Transmission plant at the intersection of U.S. 31 and Ind. 28. The company said it will create 850 new jobs at the facility with an annual payroll of $39.4 million.
Both announcements come in the wake of 32 straight months of month-over-month sales increases for the company,
Monday evening, many of the same officials were in Kokomo, where the Kokomo Common Council signed off on almost $212 million in abatements on new equipment for three Kokomo plants, an investment that could bring 400 new jobs to Kokomo and retain more than 3,400 jobs here.
“Kokomo has been a longtime, proud partner of Chrysler,” said the company’s vice president in charge of powertrain manufacturing, Brian Harlow. “During the most difficult days of the recession, Kokomo stood behind us ... there’s a great work force here, a lot of experience, and for us, it’s the right place to be.”
Company officials issued a statement, saying Monday’s abatements helped them “move one step closer to making a business case to expand our transmission manufacturing presence,” but stopped short of further details on future plans.
Monday morning, in Tipton, Harlow expanded just a bit.
“Our operations in Kokomo have outstripped our capacity,” Harlow said. “We knew we had to invest in powertrain operations.”
Harlow said the federal fuel economy standards that will begin to be phased in starting in 2016 made it important for the company to grow the business and invest in research. Fleet standards set by the federal government for 2016 require 34.1 miles per gallon.
“We’re investing in the future,” he said. “We needed additional space, that’s why we’re investing in Tipton.”
Kokomo Mayor Greg Goodnight called Chrysler “a great success story for America,” and praised the company’s plans.
“It’s good for our citizens, it’s good for our community, and it’s good for this region,” he said. “I think it says a lot about Chrysler’s turnaround, and their profitability.”
The resolutions approved by the Kokomo Common Council Monday refer to “new manufacturing equipment to produce a new advanced automatic transmission,” and to 10-year personal property tax abatements to follow a standard schedule.
The Tipton abatements, however, will be structured differently.
Unlike the traditional tax abatement schedule where the amount paid in taxes increases by 10 percent per year for 10 years, the resolution approved by the commissioners has a different abatement schedule.
The first year the abatement will be 42 percent, decrease to 41 percent for three years, drop to 40 percent in the fifth year and decrease gradually until a final 6 percent in the final year of the tax abatement.
The Tipton personal property tax abatement will be worth $2.5 million to Chrysler over the 10-year period.
The company didn’t request a tax abatement on the Getrag real estate and building. The building is 90 percent complete.
Details about when production would start in Tipton and what product will be produced were not released by Chrysler officials, indicating further details would be forthcoming.
The statement of benefits for the Tipton project indicates the company will be installing manufacturing equipment and special tooling to produce a new advanced nine-speed front wheel drive automatic transmission.
Harlow said the company is still in negotiation with W.W. Reynolds, owner of the Getrag facility. He said Chrysler doesn’t plan to lease or rent the facility.
He said the requests for tax abatements in Tipton and Kokomo are connected.
Chrysler renewed interest in the 800,000-square-foot building when it was placed back on the market earlier this year when Abound Solar, which planned to manufacture solar panels at the facility, filed for bankruptcy.
“We are investing faster than we ever have in powertrains,” Harlow said. “This is a long-term commitment.”
Harlow said Chrysler sales have been astonishing since the company emerged from bankruptcy in 2009. He said that year Chrysler sold 1 million vehicles and sales in 2012 are projected at 2.4 million units.
Company officials announced earlier this year that it intended to produce the more fuel efficient eight- and nine-speed transmissions in Kokomo, where local officials approved abatements on what is expected to be a $1.3 billion investment in new transmission manufacturing lines.
The nine-speed transmissions Chrysler is getting ready to build were designed by German firm ZF Group.
“This is an exciting opportunity for us,” he said. “Our business is doing well, we know what it’s like to go through difficult times.”
Maura Cook, senior manager for external affairs, said Chrysler is in negotiations with the Indiana Economic Development Corp. for job training incentives from the state.