DETROIT — Hard-hit Kokomo, Ind., got a big boost from Chrysler on Tuesday when the automaker announced it plans to pump another $843 million into three factories to build a new front-wheel-drive transmission.
General Motors, meanwhile, will announce Wednesday that it will bring back nearly 200 laid-off workers at an engine plant in Flint, Mich., according to a person familiar with GM’s plans. The person was not authorized to talk about the plans ahead of the formal announcement and asked not to be identified.
Both companies are recovering from last year’s auto industry meltdown when they were forced to take government bailouts to make it through bankruptcy protection.
The Kokomo announcement came just hours ahead of a visit to the plants by President Barack Obama and Vice President Joe Biden, who promoted the benefits of the auto industry bailout.
“We’re coming back,” Obama said. “We’re on the move.”
Chrysler said in a statement that the investment would pay for equipment to modernize the two Kokomo transmission factories and a casting plant. It would extend the life of the plants and help retain nearly 2,250 jobs.
Chrysler said the new investment, to start early next year and run into 2015, would raise the company’s commitment to the Kokomo plants to $1.1 billion, pushing its total U.S. factory investment to nearly $3 billion since it emerged from government-funded bankruptcy protection in 2009.
The Auburn Hills, Mich.-based automaker, now run by Italy’s Fiat Group SpA, was near death before getting a $12.5 billion bailout from U.S. taxpayers to make it through bankruptcy. In exchange, the government got a 10 percent stake in the company, which still owes taxpayers roughly $5.7 billion in loan payments.
Declared one of “America’s fastest-dying towns” by Forbes magazine in 2008, Kokomo hit bottom in June 2009 when unemployment in that midsize city in north-central Indiana reached 20.4 percent. Unemployment is still higher than the national average, but it dropped by nearly 8 percentage points to 12.7 percent in September.
The Chrysler bailout helped keep the company’s Kokomo transmission plants open. The Kokomo area also benefited from about $400 million in stimulus money, including an $89 million Energy Department grant to help Delphi Automotive Systems develop electronic components for hybrid vehicles.
The Kokomo investment would be Chrysler’s largest in a single year. It’s contingent on the city approving tax breaks.
Chrysler Group LLC has said it will partner with German-based ZF Group on the next generation front-wheel drive transmission. ZF is providing design and technology.
“For years, Kokomo has been at the center of our powertrain strategy and the potential of an additional investment reaffirms that position,” Sergio Marchionne, CEO of Chrysler and Fiat, said in a statement. “When introduced, this new front-wheel drive transmission, along with the previously announced eight-speed transmission we will also produce in Kokomo, will transform our future products and position them as leaders in the marketplace.”
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