Kokomo — Chrysler Group’s billion-dollar investment in Kokomo is expected to keep auto manufacturing jobs here for decades to come, which is why Kokomo Mayor Greg Goodnight doesn’t expect there will be any debate when Chrysler’s third abatement request of the year goes before city council Monday.
If approved, the abatement will phase in personal property taxes for an estimated $842 million worth of new manufacturing equipment over a 10-year period.
The new machinery, which will be installed in the Indiana Transmission Plant complex and the Kokomo Casting Plant, will be the reason for an estimated 2,250 Chrysler employees to come to work.
Those jobs in turn are expected to produce $155 million in annual wages.
“With what we were facing almost exactly two years ago, this is obviously good news,” Goodnight said Friday.
Two years ago, Chrysler was fighting for survival, the federal government was working on a restructuring plan, and Kokomo’s Chrysler plants were silent.
Unemployment reached almost 20 percent locally before billions in auto loans and Fiat leadership revived the Auburn Hills, Mich.-based manufacturer.
Chrysler timed the $843 million investment announcement with President Barack Obama and Vice President Joe Biden’s Nov. 23 visit to Indiana Transmission Plant II in Kokomo.
A crowd of plant employees roared as Obama repeated the investment plans, and urged a round of applause for Chrysler CEO Sergio Marchionne, who was in the audience.
“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.
United Auto Workers Local 685 president Rich Boruff first got wind of the potential investment this spring, around the same time Chrysler filed for a $43 million, 5-year abatement for new equipment at the Kokomo Transmission Plant and the KCP.
The next month, on May 10, Chrysler asked for and received a $300 million, 10-year abatement for the ITP plants on the north end of Kokomo.
With the third abatement request bringing planned investment in Kokomo to $1.85 billion, Boruff was searching for more superlatives.
“When this is up and running, there will be more transmissions made here than anywhere else in the world. Can you imagine that?” he said.
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.
“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 the marketplace.”
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.”
Goodnight he said he expects some of the equipment to begin arriving in Kokomo possibly just after the New Year. He said whether the new transmission lines eventually add to Chrysler’s Kokomo workforce will depend on future auto sales.
Goodnight did sound one note of caution, however.
“This will stabilize the economy in our city, but my obligation, and everyone else’s, is to make sure we don’t become complacent, and we remember what happened over the last few years.”