Chrysler adding 399 workers in Kokomo; seeking abatement on $43.3 million

Kokomo — As part of an Economic Revitalization Area expansion plan that will increase the local work force by 399, Chrysler Group LLC presented a draft resolution to Kokomo Common Council members Thursday.

Chrysler is asking the city to abate property taxes on $43.3 million worth of new machinery, which the company plans to bring to its Kokomo Transmission Plant.

The news came the day after Chrysler CEO Sergio Marchionne presented a five-year plan for Fiat SpA, the Turin, Italy-based firm that operates Chrysler.

As part of that plan, Chrysler will produce a third of the products for both companies; Jeep will become a global brand and Fiat’s Alfa Romeo will re-enter the American market as a full-line brand and be sold with Chrysler products, Marchionne announced.

Marchionne also said Chrysler’s North American plants are scheduled to build 400,000 vehicles for the company’s European brands.

Of the 399 employees, 379 have all ready been recalled from lay-off status, said Rich Boruff, president of United Auto Workers Local 685. The remaining 20 employees will be supervisory positions.

Boruff said the plan is to use the investment at KTP to increase production of the 62TE six-speed transmission that is currently used in the Sebring, Avenger, Journey and minivans.

When the 62TE was launched at KTP, the plant was scheduled to produce 440,000 transmissions annually. With the investment, KTP can increase production to 531,000,

“This is just the start of good things Chrysler has for Kokomo. The best is yet to come,” said Boruff. “I hope the people of Kokomo step up and grant this abatement request. They are investing in our community.”

Chrysler officials did not elaborate about how the “investing” would work, saying only that an abatement application has been filed.

“Chrysler Group has no announcement regarding its operations in Kokomo and continues to study a variety of options to support the robust product plan outlined on Nov. 4, 2009,” said Jodi Tinson, of Chrysler’s manufacturing and labor communications department. “The company appreciates the support of the city of Kokomo and looks forward to continuing a partnership that will see the Chrysler Group once again become a successful and competitive enterprise.”

Kokomo Mayor Greg Goodnight hailed the planned investment as a sign the North American auto industry is reviving.

“Obviously a $43 million investment in our city is wonderful, and I think it’s interesting that a year ago, a lot of people were wondering, ‘Should we help out the auto industry?’” he said. “I think after what we’ve gone through in the last two or three years, this is great.”

According to a Statement of Benefits filed by Chrysler with the city, the company plans to bring in “manufacturing equipment and special tooling for capacity expansion, World Global Engine adaptation and process improvements to the 62TE transmission program.”

Chrysler, which said it currently employs 2,888 workers in Kokomo, said the annual salaries and wages for the jobs created by the expansion will total more than $27 million. The average salary of the 399 workers is estimated to be $67,907 annually.

“This shows that Chrysler believes they can sell cars. They wouldn’t call back employees and make an investment if there was not a demand,” said Michael Hicks, director of the Center for Business and Economic Research at Ball State University.

Hicks said this type of economic investment could potentially bring additional spin-off businesses to Kokomo.

“[Chrysler] could have done this in Detroit, but they chose Kokomo. Indiana was far more attractive and they must like Kokomo better. The mayor must be pretty happy.”

Jeb A. Conrad, president and CEO of the Greater Kokomo Economic Development Alliance, called the announcement “exciting,” saying it is in line with the Alliance’s goal of adding 1,000 jobs to the area this year.

“This can have a huge impact,” said Conrad. “We have recalled workers working and we are talking about new employees. This shows we have the people and the facilities to be a part of Chrysler’s future plans.”

The Kokomo Common Council is expected to consider the abatement request at its meeting Monday. City officials said Thursday that even with the abatement, the investment would add up to $925,000 to the local tax rolls over the next five years, and help Chrysler bring employees back from lay-off status.

“Chrysler has been a part of our community for more than 70 years,” said Deb Cook, city director of development. “Their continued investment is a direct result of our highly skilled work force, and a strong partnership between the company and our community.”

Chrysler’s planned investment is the second automotive expansion announced in Kokomo this month.

April 12, the city council approved a $59 million abatement on new equipment Delphi Corp. will use to create new manufacturing capacity for electric vehicle components.

That project is expected to create 118 new jobs and retain 72 existing jobs, with full production volume expected by 2013 or 2014.