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Getrag loses main customer for Tipton plant

October 19, 2008

German manufacturer Getrag is without a primary customer for the transmissions it expected to make at a new factory in Tipton.

Chrysler LLC terminated a financing options agreement with Getrag over the weekend, the company said. Indiana economic development officials hope Getrag can find a new customer soon for dual-clutch transmissions that were to be made at the $530 million factory.

"It's a Getrag-owned facility, and they have put a lot of money into it, so they are certainly going to want to make it productive," said Secretary of Commerce Nathan Feltman.

The plant is expected to open in September 2009 and employ 1,400 workers.

A letter Chrysler sent Friday to Getrag was "written notice of termination of the financing options agreement to Getrag, effective immediately," according a Chrysler statement released Saturday.

The failure of the joint venture has left Chrysler without its U.S. source of fuel-efficient transmissions. The Tipton plant was expected to produce up to 700,000 transmissions a year.

"Chrysler is evaluating its range of possible options to meet its needs for fuel-efficient transmissions in future products," Chrysler said in its statement.

The termination of the agreement comes just weeks after Chrysler filed a lawsuit against Getrag, alleging that it misrepresented its ability to secure financing to build the Tipton plant.

The Auburn Hills, Mich., automaker said it is seeking damages for "wrongful conduct" and a release from reimbursing Getrag's costs related to the plant.

Getrag said in a statement Saturday that Chrysler rejected the financing structure Getrag offered, which required Chrysler to secure some of their obligations under the supply agreement.

Getrag said Chrysler's lawsuit claims are without merit. The company intends to vigorously defend the lawsuit, the statement said, and could file counterclaims against Chrysler.

The lawsuit isn't the first time the parties have come to loggerheads. Progress ground to a halt for two months beginning last December over an undisclosed dispute between the companies.

The future of the Tipton plant has a been a source of speculation, but Feltman said he's "pretty confident there's a company out there that will see this as an opportunity."

Mitch Frazier, with the Indiana Economic Development Corp., said Saturday that Getrag is actively looking for opportunities for the plant.

"They are shopping for another partner," Frazier said.

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