Daniel Human and Ken de la Bastide, Kokomo Tribune

Kokomo — Chrysler Group plans to invest $843 million in Kokomo to manufacture more modern transmissions, which will retain a couple thousand jobs, the company announced Tuesday.

The company’s announcement came shortly before President Barack Obama and Vice President Joe Biden arrived at the Auburn Hills, Mich.-based manufacturer’s Indiana Transmission Plant II in Kokomo.

A crowd of the plant’s employees roared as Obama repeated the investment plans, which are expected to retain 2,250 jobs.

Chrysler is partnering with Germany-based ZF Group to manufacture a new generation of front-wheel-drive transmissions.

Company spokeswoman Jodi Tinson would not comment on the specific type of transmission the company plans to manufacture in Kokomo.

The company has revealed it is developing a nine-speed transmission, as well as a six-gear unit with a dual clutch.

“For years, Kokomo has been at the center of our powertrain strategy and the potential of an additional investment re-affirms that position,” Marchionne said in a press statement. “When introduced, this new front-wheel-drive transmission, along with the previously announced eight-speed transmission we will also produce in Kokomo, will transform our future products and position them as leaders in marketplace.”

The $843 million will stack onto $300 million that Chrysler announced in June it would spend in Kokomo to manufacture eight-speed transmissions. The auto manufacturer also announced plans earlier in the year to invest about $43 million in new machinery at its Kokomo facilities.

Although Chrysler reported an $84 million loss during its third quarter, the investments in newer transmissions are essential for the company’s recovery, said David Cole, the director of the Center for Automotive Research in Ann Arbor, Mich.

“I would be more concerned if they were to not do it,” Cole said. “When you’re making that kind of an investment, it’s going to be around a long time.”

The investment of almost $1.1 billion is the automaker’s largest in one community in a year.

The company awaits the city of Kokomo to approve a tax abatement before it will proceed with the expansion.

The money will go toward installing equipment and special tooling to update the two Indiana Transmission Plants and the Kokomo Casting Plant.

There will be no new construction involved with the project, Tinson said.

Chrysler also has received an incentive from the state.

The Indiana Economic Development Corp. has awarded the company up to $250,000 in grant money to pay for training, agency spokeswoman Blair West said. The grant matches $1 for every $2, up to the maximum, that Chrysler spends on preparing its employees, she said.

Kokomo Mayor Greg Goodnight said the city expects the almost $1.1 billion investment to come in over three years.

“It stabilizes the local economy and gives us something to build on,” he said. “We still need to work on diversifying the economy and quality of life issues. This is huge.”

Dick Miller, president of the Howard County Council, said the county negotiated with Chrysler this past year on property taxes owed as a result of the company’s bankruptcy and on assessed value for taxes due in 2011.

Miller said county officials hoped the results of the negotiations would be more investments in Kokomo and the county.

“The reason Chrysler was cooperative was because they still saw Kokomo and Howard County as a very good place to do business,” he said. “We have always been straightforward and cooperative with Chrysler over the decades. We’ve been as good a partner as a county can be.”

U.S. Rep. Joe Donnelly, D-Ind., said he began hearing rumors about Chrysler’s plans in October.

“Our future couldn’t be brighter down here,” he said. “We have a long way to go with the unemployment. All the things we hoped would happen are happening.”

Rich Boruff, United Auto Workers Local 685 president, said Chrysler’s multiple, long-term investments have everyone in the union “just pumped.”

“Now when you add the $843 million, that’s monstrous,” he said. “... This transmission is the kind of cutting-edge technology we need.”