Kokomo Tribune; Kokomo, Indiana

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December 17, 2012

Chrysler abatements mean more area jobs

Auto expert: Company healthy and growing

Kokomo — With pending tax abatement requests in Kokomo and Tipton County this week, auto industry experts predict it will mean more jobs in Chrysler plants locally.

The Kokomo Common Council will consider a request for a 10-year tax abatement and the Tipton County Commissioners will consider a similar request from Chrysler Group LLC today.

Company officials have confirmed they have requested 10-year tax abatements, but have not released additional inform about its plans expected to be centered on the production of 8- and 9-speed transmissions.

The expected announcements in Tipton and Kokomo are a sign of a company that is healthy and growing, Bruce Belzowski, assistant research scientist at the Automotive Analysis Division of the University of Michigan, said.

“It’s growing and moving move toward where it was before the bankruptcy,” he said. “It means more jobs.”

Belzowski said companies expect a demand for the 8- and 9-speed transmissions as a way to meet the federally-mandated fleet fuel economy standards of 34.1 miles per gallon in 2016.

“The 8- and 9-speed transmissions will provide a little bump

|in terms of fuel efficiency,” he said. “If Chrysler is going to start

production in 2013, it sounds like they are ahead of everyone else. The fuel efficiency standards are a big issue for everyone.”

David Cole, chairman emeritus of the Michigan based Center for Automotive Research, said the bigger picture involves auto companies moving from the traditional 4-, 5- and 6-speed transmissions to 7-, 8- and 9-speed transmissions to obtain more fuel efficiency.

“A transmission is as expensive as an engine,” Cole said. “It requires a lot of retooling and restructuring of the business.”

Cole said Chrysler’s major transmission operations are in Kokomo and the request for a tax abatement is not a surprise.

“There really is a demand for 8- and 9-speed transmissions,” he said. “That demand is expected to increase.”

Cole said General Motors and Ford recently announced that it working jointly on the development of 8- and 9-speed transmissions.

“Auto makers want to optimize engine performance through the transmissions,” he said. “They goal is to have engines operate at its most efficient point for as long as possible.

“The race is to find every technology to add fuel efficiency,” Cole said. “The 8- and 9-speed transmissions are in demand. Chrysler is ahead of the game.”

He said Chrysler is currently not making as much money per vehicle sale as Ford or General Motors, but it is in a better position than losing money on each sale.

“There has been a positive response in the market place,” Cole said. “This is all good news. These transmissions are going to be more complex and require major retooling. It means job security and more jobs.”

Cole said Chrysler’s Kokomo plants are producing high quality transmissions and they don’t have problems with them.

Kristen Andersson, with the California based True Car research group, said the request for the tax abatements shows Chrysler’s commitment to manufacturing in America and creates a base for more jobs and investment in the future.

“Chrysler is experiencing phenomenal growth,” she said. “Nobody saw it coming. Their products are in high demand which is good news for Indiana and that area.”

Andersson agreed that Chrysler is “ahead of the curve” in terms of the technology for the 8- and 9-speed transmission.

“There focus and commitment is to bring technically-advanced transmissions to the market,” she said.

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