By KEN de la BASTIDE, Kokomo Tribune enterprise editor
The decision by Getrag Transmission Manufacturing to cancel construction of a $530 million plant in Tipton County will have an impact on the local economy.
The plant, which started as a joint venture between Getrag and Chrysler last year, has unraveled into a series of lawsuits and Getrag's filing for bankruptcy.
The new wet dual-clutch transmissions to be used in the next generation of Chrysler vehicles was scheduled to roll off the Tipton assembly line next summer. The plant was expected to employ about 1,100 workers, many of them United Auto Workers.
"The bankruptcy will have a big impact," Jason VanAlstine, acting professor of economics at Indiana University Kokomo, said Tuesday. "Unemployed people in Kokomo would have had a chance at those jobs. It is an opportunity that is not there anymore."
VanAlstine said he would be surprised if the 900,000-square-foot building would sit idle. Located at the intersection of U.S. 31 and Ind. 28, the building is 80 percent completed.
"Under the current economic conditions, I don't think it will be completed," he said. "In the long run, it will be."
Dave Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said the fate of the Tipton plant is a hard call.
"The overpowering problem is the huge fall off in sales," Cole said. "Everyone is looking to conserve cash. They are cutting everything they can."
The auto industry is dealing with depression-level sales, according to Cole. He said the industry could survive with recession-level sales.
"The industry needs stability and higher sales levels," Cole said.
He said it is possible that Getrag could reach an agreement with another automaker, which will enable the plant to open.
"It is good technology," Cole said. "Have to get through the fiscal crisis."
With Congress debating a possible $25 billion bailout package for U.S. automakers, VanAlstine said the industry needs some breathing room.
"Normally, I'm not in favor of government bailouts," he said. "There are big long-term problems in the auto industry, and they need to regroup and have some financial stability."
VanAlstine said without government funding, it was possible one or two U.S. automakers will declare bankruptcy.
A concern is how any federal funds will be distributed to General Motors, Ford and Chrysler, he said.
"American car companies have to be more competitive with foreign companies," VanAlstine said. "Foreign companies are providing good-paying jobs and benefits."
Cole said the automakers are in "shock" as a result of the fiscal crisis and trying to plug all the holes in the dikes.
He said in these turbulent times, the companies need financial assistance.
"They have already done massive restructuring," Cole said of the automakers. "The companies can be financially stable down the road."