Construction has stalled on transmission plant

By Ted Evanoff

Chrysler renegotiating after curbing output, analysts say Construction has halted on the $530 million Chrysler-Getrag transmission plant near Tipton, while the partners sort out an undisclosed contract issue related to Chrysler's decision to scale back vehicle output, industry analysts said.

In limbo: Construction on a $530 million Chrysler-Getrag transmission plant near Tipton has stopped while the partners resolve a dispute arising from Chrysler's decision to scale back vehicle production. The plant is to supply fuel-efficient transmissions for Chrysler's Phoenix V-6 engine. - MATT KRYGER / The Star from WTHR Chopper 13

Chrysler and German transmission designer Getrag partnered last year on a major plant at Tipton meant to supply fuel-efficient transmissions to be used with Chrysler's Phoenix V-6, a newly designed gasoline engine scheduled to reach market in 2009.

But the U.S. economy has cooled, and the automaker is eliminating eight work shifts in vehicle assembly plants, including plants originally slated to begin assembly in 2009 of autos equipped with the front-wheel-drive Phoenix-Getrag powertrain.

Auto analysts say the decision to cut car production means the Tipton plant would open in 2009 producing far fewer Getrag transmissions than originally thought. As a result, Chrysler appears to be negotiating to pay the same price for the Getrag transmission at low production volumes as at high volumes.

Chrysler declined to comment about the negotiations.

Despite the construction delay at Tipton, Chrysler spokesman David Elshoff said Thursday that no plans are being made to delay the introduction of the Phoenix-Getrag powertrain or push back the launch of the vehicles for which the new powertrain has been designed.

Elshoff said Chrysler, which earlier allocated $1.7 billion for new engine plants, has continued construction of the Phoenix plants going up in Trenton, Mich., and Saltillo, Mexico.

Work at the Tipton plant was halted Dec. 21 and hasn't resumed, the Kokomo Tribune reported Wednesday.

"At this point, we don't see a disruption in the program schedule," Elshoff said, referring to the transmission reaching market next year. "We have discussions going on this week with Getrag. It's our hope at the conclusion of these talks, we'll be able to resume building in Tipton."

Officials at Getrag Corp. of North America, based in Sterling Heights, Mich., did not return calls seeking comment.

Getrag would manage the Tipton plant. Its 1,400 workers would come chiefly from volunteers at the Chrysler Kokomo transmission complex and laid-off Chrysler workers.

The Getrag transmission, known as a dual wet clutch, appears to the car driver to function like an automatic, while it delivers the superior fuel economy of a manual transmission.