Chrysler to Invest $374 Million at Transmission Plants

Chrysler Group LLC, the automaker majority owned by Fiat SpA (F), will invest about $374 million and add 1,250 jobs at Indiana factories to boost output of eight-and nine-speed transmissions.

Chief Executive Officer Sergio Marchionne disclosed the investment at one of the factories in Kokomo, Indiana. The transmissions and their additional gears improve performance and boost fuel economy.

“This is the sole region where we manufacture transmissions, and including all of the nearby facilities, it will be the largest transmission installation in the world,” Marchionne told workers today at one of the plants.

Marchionne, who is also Fiat CEO, is betting he can meet regulatory requirements for increased fuel efficiency primarily by improving traditional gasoline engines with the better transmissions. The strategy takes less investment than developing gasoline-electric hybrid vehicles.

“With more gears, these transmissions can run more often in their optimal speed ranges, providing both better fuel economy and vehicle performance,” Marchionne said at today’s event.

Chrysler plans to spend $212 million for additional equipment and tooling at its Kokomo Transmission, Kokomo Casting and Indiana Transmission I plants, which will create as many as 400 new jobs. Work begins in this year’s second quarter and will be completed in the fourth quarter.

New Factory

The company also will acquire a former Getrag facility and invest $162 million in a new Tipton, Indiana, plant for nine- speed transmissions, which adds as many as 850 new jobs. That site will be completed at the end of 2014. Chrysler employs more than 6,100 workers in the Kokomo area, according to a statement. Tipton is about 20 miles (32 kilometers) south of Kokomo.

The Indiana Transmission I factory topped production of 530,000 six-speed transmissions last year, Marchionne said. The factory originally was tooled to build 400,000 units, he said. A nearby company plant that builds five-speed transmissions also surpassed a half-million units, exceeding its official capacity of just 400,000, according to Chrysler.

To contact the reporter on this story: Craig Trudell in Kokomo, Indiana, at ctrudell1@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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