Tipton fiasco spurs Getrag unit's bankruptcy

November 17, 2008

Getrag Group is blaming a deal gone bad with Chrysler LLC for bankrupting a subsidiary the German transmission manufacturer formed to build and manage a $530 million plant in Tipton.

Officials in Getrag's U.S. headquarters in Sterling Heights, Mich., filed for bankruptcy protection in Detroit this morning for its Getrag Transmission Manufacturing LLC unit, stating it owes more than $500 million on its Tipton plant.

Getrag officials said in court papers the 900,000-square-foot Tipton facility is 80-percent complete. Construction stopped in October.

Getrag officials said the Tipton facility was being built for the sole purpose of manufacturing dual-clutch transmissions for Chrysler. Now, the officials said, the plant's future is uncertain.

Getrag was jointly building the Tipton plant with Chrysler, but the deal soured in October when Chrysler filed a lawsuit claiming Getrag violated a contract by failing to obtain as much as $300 million in debt financing before construction of the plant was under way.

G
etrag countered that Chrysler rejected a financing plan it offered.

The plant is north of Indianapolis and south of Kokomo, where Chrysler operates transmission plants. Some of the work from those plants was expected to be shifted to the new Getrag facility, which is on 103 acres along U.S. 31.

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