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Chrysler to announce investment in Kokomo plants

Thursday - 2/28/2013, 4:10am  ET

TOM KRISHER
AP Auto Writer

Chrysler will announce 1,250 new jobs and a major investment Thursday at transmission and metal casting factories in the Kokomo, Indiana, area.

CEO Sergio Marchionne will confirm that the plans include an investment of $162 million and the creation 850 jobs at a former Getrag Transmission plant in nearby Tipton. Another 400 jobs will be created at three other factories.

The company is investing millions in the Kokomo area to build fuel-efficient eight- and nine-speed automatic transmissions.

Chrysler plans to use a new nine-speed transmission in the Jeep Cherokee midsize SUV and in the Dodge Dart compact. The Cherokee will replace the aging Jeep Liberty later this year.

Most manufacturers rely on five- and six-speed transmissions to move their cars and trucks. But Chrysler and others are planning for more gears. Generally, transmissions with more gears help cars perform better and get better mileage because engines don't have to work as hard at highway speeds

Chrysler now has three transmission plants and a metal casting plant in the Kokomo area that employ about 6,100 people.

In December, the Kokomo City Council voted to approve property tax breaks requested by Chrysler for $212 million in new equipment for its factories in the city. Tipton County officials also endorsed a similar request on Chrysler's $162 million plans to complete a sprawling factory along U.S. 31 that has never been occupied. German auto parts maker Getrag stopped construction in 2008.

Brian Harlow, Chrysler's vice president in charge of powertrain manufacturing, told county commissioners at the time that the company needs more transmission factory capacity to handle growing sales. Chrysler's sales have grown to 1.65 million last year from just over 931,000 in 2009, the year it emerged from bankruptcy protection.

Chrysler's request to Kokomo officials said the investment will help retain 3,400 jobs in the city.

The company hopes the nine-speed transmissions help the Dart live up to expectations. It was unveiled with much fanfare at the 2012 Detroit auto show, but only 25,000 were sold last year. Chrysler, owned by Italy's Fiat, had touted the sleek compact as the perfect blend of aggressive American styling and Italian technology. It was supposed to be Chrysler's first competitive compact since the 1990s.

Marchionne said the company mistakenly equipped the Dart with transmissions and engines better suited to European drivers than Americans. He said the nine-speed transmission would be more suitable to U.S. drivers because the added gears will help the car shift more smoothly and accelerate faster.

Dart sales did pick up in January, rising to more than 7,100. The car is built in Belvidere, Ill.


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