Kokomo — Chrysler Group LLC will invest $300 million into the company’s existing transmission manufacturing facilities in Kokomo to accommodate a new highly fuel-efficient, eight-speed automatic transmission for future Chrysler vehicles.
It is the largest investment in the U.S. since the new company was formed in June 2009. It was aided by the approval of a tax abatement from the city of Kokomo and brings total powertrain investment to nearly $1.3 billion since 2007.
The investment will fund the installation of equipment and special tooling to modernize Indiana Transmission Plant I and the Kokomo Casting Plant. The project will extend the life of both manufacturing facilities and help retain nearly 1,200 jobs.
“I knew something big was going to happen there, but not this big,” said Michael Hicks, director of the Center for Business and Economic Research at Ball State University. “I don’t think you can get any better news.
“It’s easy to see that that jobs are going to be saved because of this, and there may be some significant amount of investing in the plants, but more importantly for Kokomo, if anyone ever had any doubts that Kokomo wasn’t a viable place to do manufacturing business, from all we’ve heard from Chrysler and Delphi, they ought to put those notions to rest.”
Chrysler has licensed the manufacturing rights from Friedrichshafen, Germany-based ZF Group to build the new eight-speed beginning in 2013. Included in this agreement is the purchase of transmissions manufactured by ZF.
Company officials indicate the transmission is vital for them to reach their fleet goal of increasing fuel economy by 25 percent by 2014.
”The new eight-speed transmission that we’ll be producing in Kokomo will transform our future product line, but equally important, ensures the future viability of our Kokomo facilities and our dedicated work force,” said Scott Garberding, senior vice president and head of manufacturing for Chrysler Group LLC.
“In addition, the state of Indiana and Gov. Mitch Daniels, the city of Kokomo and Mayor Greg Goodnight as well as Congressman Joe Donnelly, Congressman Dan Burton and the rest of the Indiana Congressional delegation have been valued partners as Chrysler Group works to bring the most technologically advanced and fuel-efficient vehicles to market. This investment would not be possible without their continued support.”
The new transmission will contribute to an overall fuel economy improvement across the Chrysler, Dodge, Jeep and Ram Truck product lineup. More sophisticated and efficient than traditional five- and six-speed automatic transmissions, the new eight-speed is part of Chrysler Group’s stated commitment to fuel economy.
According to the National Highway Traffic and Safety Administration, in 2009, Chrysler’s cars averaged 28.3 miles per a gallon, which was lowest among the world’s automakers.
Honda lead foreign automakers with 36 mpg and General Motors Corp. was America’s highest with 31.3 mpg.
“The new eight-speed automatic transmission will offer our customers refinement and comfort while achieving greater fuel economy and performance,” said Paolo Ferrero, Senior Vice President – Powertrain, Chrysler Group LLC. “We look forward to integrating the new transmission into future Chrysler Group products and welcome its contribution to a corporate fuel economy improvement of more than 25 percent by 2014.”
Since this transmission has more speeds — more speeds allow for smoother shifting between gears which reduces an engine’s work which means less fuel used — according to automotive analysts, the eight-speed transmission can improve economy by 14 percent over a five-speed automatic transmission.
Last month, Chrysler announced that it would invest $43 million in new equipment and tooling to expand its operations in Kokomo to support production of the World Engine and improve processes for the 62TE transmission program.
The investment creates 399 new positions, including up to 379 to be filled by employees called back from layoff status and 20 new hires in supervisory positions.
According to the automaker, there are 2,257 employed (2,027 hourly; 230 salaried) at the Kokomo Transmission Plant and 673 employed (585 hourly; 87 salaried) at Kokomo Casting, the world's largest die-casting facility.
“This is a huge impact on the international level,” said Jeb A. Conrad, president and CEO of The Greater Kokomo Economic Development Alliance. “It helps to validate what many of us believe, that we have the best manufacturing in the country. This investment will drive new investments. From the local leadership level, they showed the corporate level it was in their best interest to invest in Chrysler’s future. This has been an amazing story.”