Indiana Economic Digest | Indiana
Advanced Search

• Most Recent

home : most recent : most recent May 25, 2016

2/18/2012 2:20:00 PM
Chrysler backs out of $3.5 billion federal loan, but says Kokomo investments a go

Daniel Human, Kokomo Tribune Staff Writer

Chrysler Group’s withdrawal of a government loan application will not affect plans to invest almost $1.3 billion in Kokomo, a company spokeswoman said Friday.

The automaker the day before stated it has backed out of a bid for a $3.5 billion low-interest loan from the U.S. Department of Energy’s Advanced Technology Vehicles Manufacturing program.

“The Department of Energy’s proposed terms were very restrictive and compliance would have negatively affected our operational flexibility,” Chrysler stated.

Loan money would have gone into developing fuel-efficiency technologies. Part of that strategy involved producing more efficient eight- and nine-speed transmissions in Kokomo.

“It’s February. We have two transmission programs due to launch at the end of the year,” said Chrysler spokeswoman Jodi Tinson. “It’s a little hard to pull all of that back now.”

The company has more resources to draw from than a few years ago, when it applied for the loan.

A 26 percent increase in U.S. sales in 2011 boosted Chrysler’s revenues to $55 billion. That yielded a net income of $183 million, which was the automaker’s first annual profit since it restructured in 2009.

Chrysler had about 550 more Kokomo employees at the end of 2011 than it did a year earlier.

The company would have joined four other automakers as recipients of the Department of Energy’s loan program. The federal agency has awarded $9.1 billion of its total $25 billion available.

The department loan office that manages the vehicles program has received public scrutiny over the past year. Attention has focused on apparent oversights with awards to other companies, including a $535 million loan guarantee it gave to now-defunct solar manufacturer Solyndra.

The same loan office in 2010 approved a $400 million loan for Colorado-based Abound Solar. The company plans to expand to an empty factory at the corner of U.S. 31 and Ind. 28 in Tipton County.

The Associated Press contributed to this report.

2016 Community Newspaper Holdings, Inc.

Editor, John C. DePrez Jr.; Executive Editor, Carol Rogers; Publishers: IBRC and IAR

Software © 1998-2016 1up! Software, All Rights Reserved