Chrysler to invest $266 million in Kokomo

Chrysler brought some early holiday excitement to Kokomo and its extensive auto manufacturing community Monday.

Chrysler Group announced plans to invest $266 million in new manufacturing equipment in Kokomo, which will allow the company to expand production of its 8-speed transmissions at two of its four Kokomo plants.

Those two plants are expected to be the Kokomo Transmission Plant and the Kokomo Casting Plant.

To assist Chrysler, the Kokomo Common Council unanimously approved a 10-year tax abatement on personal property taxes for the investment Monday night. The council is expected to approve a second and final reading during a special meeting on Dec. 22.

The investment will allow Chrysler to retain an estimated 212 jobs with an aggregate salary worth more than $9.8 million.

The latest spending in Kokomo brings Chrysler’s investment in the area up to nearly $1.9 billion since the company filed for bankruptcy. The company began operations as a new entity in June 2009.

At the time, Chrysler CEO Sergio Marchionne acknowledged he had to make what he called a “tough” decision when he decided to develop new powertrains in the wake of the Fiat/Chrysler merger.

The result of those decisions was a total of $1.6 billion invested in the Kokomo/Tipton region, and some 2,600 jobs.

“Chrysler’s investment is one in a series of recent indicators for Kokomo’s continued economic expansion,” said Kokomo Mayor Greg Goodnight. “Kokomo is thriving. Our city’s economic development strategy and quality-of-life initiatives for all of Kokomo are intended to facilitate this type of private investment.”

Council members also voiced their excitement about the investment, stating it will bring job security to Chrysler’s Kokomo employees.

“This will allow for retention of jobs,” said councilman Bob Hayes, who carried the resolution. “It will allow Chrysler to be more profit-centered. When companies are profitable that means more job security and possibly more jobs.”

“This is going to really help with job security,” councilwoman Cindy Sanders added. “The biggest thing for me is that this is all happening right here in Kokomo and it’s going to help the people of Kokomo.”

Consumer demand for Chrysler’s fuel-efficient vehicles with an 8-speed transmission led to the need for an increase in manufacturing capacity. Since production began, more than 1 million Chrysler vehicles equipped with the 8-speed transmission have been sold. 

Chrysler received a five-year abatement from the city in April 2010 on $43 million worth of new machinery, creating nearly 400 jobs between the Kokomo Transmission Plant and Kokomo Casting Plant to produce the 62TE six-speed transmission.

Chrysler later invested $300 million in June 2010 into the company’s transmission manufacturing facilities in Kokomo to accommodate the new, fuel-efficient, eight-speed automatic transmissions. At the time, it was the largest investment in the U.S. since the new company was formed in June 2009, and was aided by the approval of a 10-year tax abatement from the city.

Chrysler’s third tax abatement request came in December 2010 on the heels of an announcement it planned to invest $842 million in Kokomo to manufacture a new generation of nine-speed, front-wheel-drive transmissions. The city signed off on a $212 million, 10-year abatement for new equipment for three Kokomo plants.

That investment came in addition to $162 million in equipment for a new transmission plant in Tipton with $2.5 million in abatements, adding a total of 1,200 jobs to the area.

The next round of investments came in February 2013, when Chrysler announced plans to increase its production of eight- and nine-speed transmissions with a $374 million investment, adding 1,250 jobs – 400 in Kokomo and 850 in Tipton – making it the only auto manufacturer in the country to produce both transmissions. 

Chrysler’s four transmission plants currently have the capacity to produce 800,000 units annually.