Chrysler Lawsuit Pushes Getrag To File For Bankruptcy Photo:
Tony O'Kane | Nov, 19 2008 | 0 Comments

More bad news for the US auto industry. A US division of gearbox manufacturer Getrag has filed for Chapter 11 bankruptcy protection after Chrysler launched legal proceedings against it over an unfinished transmission plant in Indiana

Chrysler's lawsuit alleges that Getrag Transmission Manufacturing violated a contract after it failed to secure around $300m US in debt financing to fund its share of the plant's costs. Getrag denies the claim, and says that under the contract Chrysler would have been required to purchase gearboxes exclusively from the Indiana plant and reimburse Getrag over $300m USD for machinery, equipment and tooling expenses.


The plant, which was meant to produce a new six-speed DSG gearbox for future Chryslers and employ about 1200 workers, remains just 80 per cent finished while Getrag and Chrysler sort out their legal wrangle.

Odds of the project being restarted are slim, as Chrysler has terminated Getrag's supply contract as a result of the stoush and is refusing to reimburse the gearbox manufacturer for any costs already absorbed in the construction of the plant.

While Chrysler already faces an uncertain future, the inhabitants of Tipton, the town where the transmission plant was to be built, are in even more dire straits. In times where car production is being scaled back and parts suppliers are closing down, the Getrag factory was seen as a small beacon of light and an important source of employment for the locals. However, with Getrag and Chrysler parting ways on the project, it seems that Tipton will become just another American town with not enough jobs to go around.

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