Dodge Nitro Forum banner

1 - 9 of 9 Posts

Super Moderator
23,864 Posts
Discussion Starter #1
Statement in Response: Chrysler v Getrag

Last update: 8:00 p.m. EDT Oct. 8, 2008

AUBURN HILLS, Mich., Oct 08, 2008

-- On October 7, after months of negotiations, Chrysler filed a lawsuit in Oakland County Court charging that Getrag and its U.S. subsidiary Getrag Transmission Manufacturing LLC misrepresented its ability -- and failed to use good faith efforts -- to secure financing to support the joint development of a manufacturing plant in Tipton, Indiana, to build dual clutch transmissions, which would be purchased principally by Chrysler for use in its vehicles, in breach of their agreements with Chrysler.

Getrag was obligated under these agreements to obtain debt financing. Contrary to Getrag's representations to Chrysler, Getrag knew that it could not obtain debt financing within the required time frame, and also knew that unless Chrysler was willing to assume significant additional obligations, debt financing could not be obtained at all. Getrag also failed to use good faith efforts to secure the financing. Despite this conduct, Getrag expects Chrysler to reimburse costs Getrag has incurred in connection with the project.

Chrysler brings this civil action to recover all damages it has sustained as a result of defendants' wrongful conduct and to obtain a judgment declaring that it has no obligation to reimburse defendants' costs related to the Tipton plant.

Chrysler is evaluating its range of possible options to meet its needs for fuel efficient transmissions in future products.


Super Moderator
23,864 Posts
Discussion Starter #3
Getrag says "stunned" by Chrysler suit

Getrag says "stunned" by Chrysler suit
Mon Oct 13, 2008 3:00pm EDT

DETROIT - German auto parts maker Getrag Transmission Manufacturing said on Monday it was "stunned" by a lawsuit by Chrysler LLC, saying it had not violated any agreements to supply transmissions for the automaker.

Chrysler filed a suit with Oakland County Court in Michigan on October 8, saying Getrag had failed to secure a pledged debt financing necessary to build a plant in Tipton, Indiana, to produce fuel-saving transmissions for the automaker.

Chrysler said in court documents Getrag had been obliged under the agreement to obtain debt financing worth up to $300 million, and its failure to do so within the required time frame threw the project into uncertainty.

"Having worked closely with Chrysler to secure the financing of this project, we were stunned to receive this lawsuit," the supplier said in a statement.

"Getrag strongly disagrees with any claim by Chrysler that it has violated any agreements between the parties, and Getrag has acted in good faith with Chrysler to develop the project," it said.

Getrag said it was in the process of reviewing the lawsuit and has contacted Chrysler's representatives to arrange a meeting to discuss the situation.

Chrysler and Getrag started building the $530 million plant in May 2007 under an agreement reached in February that year.

The plant was scheduled to open in 2009 and manufacture fuel-saving dual-clutch transmissions, which would be purchased principally by Chrysler, Chrysler said.

Chrysler is seeking damages for any delays and potential costs it might incur for changing transmission suppliers.

The company has also asked the court to relieve it of any reimbursement of costs already absorbed by Getrag.

LINK:Getrag says stunned by Chrysler suit | Deals | Reuters

Super Moderator
23,864 Posts
Discussion Starter #4
Getrag says Chrysler terminates supply deal

Getrag says Chrysler terminates supply deal

Fri Oct 17, 2008 8:37pm EDT

Getrag Transmission Manufacturing LLC said on Friday Chrysler LLC had rejected a financing proposal for a planned Indiana plant and terminated a supply agreement with the private German auto parts maker.

Getrag and Chrysler, which is owned by Cerberus Capital Management, had announced in 2007 they would build a $530 million plant in Tipton, Indiana, to produce dual-clutch transmissions starting in 2009, mainly for Chrysler.

The plant was expected to employ about 1,100 workers.

Getrag is still evaluating its options in light of Chrysler's decision, a spokeswoman said. It also said it would seek reimbursement from Chrysler for expenses incurred by Getrag and its suppliers in the project.

A representative of Chrysler, which is in talks with General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) and other automakers about a potential sale of some or all of its assets, could not be reached immediately for comment.

The breakdown of the deal between Getrag and Chrysler is one of several disputes between the automaker and its suppliers to become public in recent months, as Chrysler's sales have fallen.

The plant has been expected to supply fuel-saving dual-clutch transmissions to Chrysler's V-6 engine program, codenamed the Phoenix, but has become mired in a longrunning dispute.

Chrysler has not said which U.S. vehicles would get the transmissions. The dual-clutch transmission allows for quicker shifts, saving fuel.

Chrysler sued Getrag over the deal earlier this month, alleging the supplier failed to raise $300 million in debt financing needed to complete the plant.

Getrag said on Friday Chrysler had rejected a financing structure it offered with banks that had required Chrysler to secure some of their obligations under the supply agreement.

Getrag supplies dual-clutch transmissions to Chrysler in Europe for the Dodge Journey crossover, the Dodge Avenger sedan and Chrysler Sebring sedan.

LINK:UPDATE 1-Getrag says Chrysler terminates supply deal | Deals | Private Capital | Reuters

Super Moderator
23,864 Posts
Discussion Starter #5
State hopes to find tenant for Tipton Co. plant

State hopes to find tenant for Tipton Co. plant
Updated: Oct 18, 2008 10:08 PM EDT

Tipton County - State officials hope a new plant in Tipton County won't sit vacant for long.

GETRAG was building the new plant to produce transmissions for Chrysler, but the deal fell through. Now, the two sides aren't even talking.

"It's incredibly unfortunate that the relationship between the two has gone awry," said Indiana Secretary of Commerce Nathan Feltman. "The Governor and I are working closely with GETRAG executives as they pursue additional options for the facility, and we are confident that such a state-of-the-art plant and product will attract new opportunity for GETRAG and Indiana."

LINK: WTHR - Indianapolis News Weather -State hopes to find tenant for Tipton Co. plant

Feltman hopes GETRAG will find a new use for the plant. He plans to meet with GETRAG executives and community leaders next week in Tipton.

Super Moderator
23,864 Posts
Discussion Starter #6
Scuttled Chrysler parts plant an emblem of uncertainty

Scuttled Chrysler parts plant an emblem of uncertainty

Sun Oct 26, 2008 1:49pm EDT

TIPTON, Ind., The construction crews have checked out of the Flamingo Motel, a $35-a-night motor lodge across the state road from a gleaming and still-unfinished auto parts plant that may never hire a single worker.

"It's a big, sad story," said Kishor Patel, who owns the Flamingo and has watched guests slip away along with the town's dreams for a bonanza of 1,200 steady jobs making transmissions for Chrysler LLC.

With the U.S. auto industry pushed to crisis, Detroit's uncertainty is rippling out to towns like Tipton, Indiana, where auto suppliers and their workers wait in an uneasy limbo.

German transmission supplier Getrag has suspended work on the $530-million plant in Tipton, now 80-percent complete.

In a dispute that will shift to a Michigan court, Chrysler told Getrag this month it was terminating the deal to supply fuel-saving transmissions for a new-generation of engines Chrysler had hopefully dubbed its "Phoenix" project.

The breakdown of the Getrag deal is one of several disputes between Chrysler and its suppliers to have shot to public view in recent months, as the struggling automaker's sales have plunged and its private equity owner Cerberus Capital Management has ordered steps to shore up cash.

Now with Cerberus in talks to sell Chrysler to General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz), Chrysler's supply base has gone to code red as companies small and large scramble to assess the risk they would face from lost business in a merger.

According to people familiar with the talks, GM has also pushed to clarify how many of Chrysler's suppliers could be facing deep financial problems or bankruptcy in the event it takes over its smaller rival.

Chrysler said on Friday it would cut about 25 percent of its white-collar workers, near 5,000 jobs, and cut capital investment. A day earlier, Chrysler announced it was cutting 1,825 jobs at SUV plants in Ohio and Delaware.

The downdraft has also hit Tipton. The Getrag plant would have been a welcome boost to a county where the unemployment rate is near 8 percent. It would also have been first step in an industrial food chain meant to feed union-represented axle and engine plants in Michigan.

But Chrysler has now put much of its future product development work on hold as it hunkers down at a time when industry-wide U.S auto sales are near two-decade lows.

"Anything they have been investing from 2010 onward is being put on hold or delayed," said Lars Luedeman, an analyst at Grant Thornton.


Meanwhile, less than two hours drive to the south, Japan's Honda Motor Co this month started production at a new assembly plant in Greensburg, Indiana, that will make 200,000 compact Civic sedans annually when it hits its stride.

Continued Here:
Scuttled Chrysler parts plant an emblem of uncertainty | Industries | Consumer Goods & Retail | Reuters

Super Moderator
23,864 Posts
Discussion Starter #7
Getrag Puts Plant In Chapter 11

Getrag Puts Plant In Chapter 11, Blames Chrysler Dispute

November 17, 2008: 12:09 PM EST

DETROIT -(Dow Jones)- Auto parts maker Getrag Transmission Manufacturing LLC put its unfinished Indiana plant into bankruptcy protection Monday, blaming Chrysler LLC's (C.XX) termination of an exclusive contract.

The Tipton plant, 80% complete, was being built to supply Chrysler with dual clutch transmissions before Chrysler announced in October it was terminating the deal over financial issues.

"As a result of Chrysler's actions, GTM LLC has been forced to terminate its operations in Tipton and cancel the project," according to Getrag. The filing doesn't affect Getrag's other operations.

Getrag said it owes more than $500 million to more than 200 parties related to construction costs, according to a court filing. The company is continuing to pursue a lawsuit it filed against Chrysler in October while Chrysler is seeking $500 million in claims.

A Chrysler spokeswoman had no immediate comment.

The bankruptcy filing underscores how unexpected changes in the financial relationship between auto makers and their suppliers can lead to drastic steps. Chrysler, Ford Motor Co. (F) and General Motors Corp. (GM) are expected to make their case this week in Washington, D.C., for federal assistance to continue operating.

Any problems in auto maker payments to their suppliers could set off a wave of product disruptions shutting down assembly plants throughout the U.S. GM has already said it may be forced to file for bankruptcy protection if it doesn't receive any financial aid. GM and Ford are also slowing some its product development, further stressing the supplier sector.

This is also the second time that Chrysler's actions have contributed to a bankruptcy filing. Plastech Engineered Products Inc. filed for Chapter 11 in February after Chrysler terminated all of its contracts. The auto maker said it made the decision after Plastech failed to get financial aid from its customers to continue operating. The company was liquidated, with some of the operations bought by Johnson Controls Inc. (JCI).

Chrysler, owned by Cerberus Capital Management LP, is breaking traditional supplier relationships as it attempts to wring costs from its struggling operations. It currently is locked in two other legal fights with suppliers Johnson Controls and Dana Holding Corp. (DAN).

Dana is waiting to see if it will be allowed to end its 70-year parts relationship if it doesn't receive new payment terms. The company has said that it is losing $75 million a year under current part contract terms.

The German-based Getrag and Chrysler announced the joint venture project in April 2007 with plans calling for the two companies to invest a combined $530 million in the plant that would employ about 1,200 workers. Transmissions were slated to begin shipping in late 2009.

Chrysler sued Getrag on Oct. 7, charging that the company and its subsidiary Getrag Transmission misrepresented their ability to secure financing to support the joint development of the Tipton plant.

A hearing is scheduled for Friday in the U.S. bankruptcy court in Detroit.

Getrag Puts Plant In Chapter 11, Blames Chrysler Dispute

Super Moderator
23,864 Posts
Discussion Starter #8
updated: 2/26/2009 1:08:35 PM
[UPDATED] State Seeks Compensation For Getrag Plant Contractors

Inside INdiana Report

Greater Kokomo Economic Development Alliance President and Chief Executive Officer Jeb Conrad says the vacant factory could be a magnet for future investment and jobs in the region.

The state of Indiana is pressuring Chrysler LLC to use a portion of bailout money to pay contractors who had been working on the Getrag Transmission plant in Tipton County. Secretary of Commerce Mitch Roob makes the request in a letter sent this week to the Kokomo Tribune and the Tipton Tribune. The Indiana Economic Development Corporation says there will be no further comment or distribution of the letter. In it, Roob states Chysler's decision to pull out of the project has "produced a devastating blow to the local contractors hired to construct the facility."

Chrysler says any concerns about the project should be sent to Getrag.

The Kokomo Tribune reports Chrysler insists it was Getrage that abandoned construction of the plant and the contractors, subcontractors and suppliers were employed directly or indirectly by Getrag.

Getrag Transmission Manufacturing LLC (GTM) canceled its project in Tipton late last year after filing for bankruptcy. The company says the actions are a result of Chrysler LLC's decision to pull out of the $530 million joint venture.

Source: Inside INdiana Business, Kokomo Tribune, Tipton Tribune, Indiana Economic Development Corporation.

Super Moderator
23,864 Posts
Discussion Starter #9
More Fall Out: Getrag

Press Release

TIPTON, IND., March 2, 2009 -- Tipton County, Indiana, is asking Chrysler, LLC, to return $5.5 million dollars in bonds the county issued to develop a transmission manufacturing plant. Officials have also asked Chrysler to honor its commitment to reimburse Tipton County at least $4.5 million for amounts owed to third parties as a result of the project.

The requests for payment are a result of the bankruptcy of Getrag Transmission Manufacturing LLC, litigation between Getrag and Chrysler, and the apparent termination of the manufacturing facility project in Tipton County.

The request for payment comes after several months of discussions of the City and County project team, which included the Tipton County Board of Commissioners, Tipton Mayor Dan Delph, former Tipton County Commissioner Tom Dolezal, Tipton Utilities Director, Dave Reep, and the county’s legal and financial advisors.

“If Chrysler had fulfilled its obligation to inform Tipton County of the project’s status, we would not have issued the bonds,” said Dolezal.

Tipton County’s request to Chrysler for the $4.5 million reimbursement and the return of $5.5 million in bonds has already been rejected. Officials received a rejection letter from Chrysler February 24.

“We are very disappointed and upset by Chrysler’s rejection of our requests,” said Jane Harper, Tipton County Commissioner. “We merely called for Chrysler to honor its obligation under the commitment agreement we all agreed to in 2007.”

Construction on the 900,000-square-foot plant began in July 2007 on a 145-acre site at U.S. 31 and Indiana Highway 28. The plant was designed to produce energy-saving dual-clutch transmissions for Chrysler and would have created up to 1,400 jobs.

When the project was announced it was hailed as the greatest single investment ever to be made in Tipton County.

Legal troubles between Chrysler and Getrag began in October 2008 when Chrysler filed a lawsuit accusing Getrag and a U.S. subsidiary of breach of contract and fraudulent misrepresentation. Getrag Transmission Manufacturing LLC canceled the Tipton project and filed for bankruptcy protection in November, leaving the partially completed building at the gateway to the community.

In the early stages of the project a commitment agreement dated May 3, 2007, spelled out terms of the parties’ relationship. Tipton County agreed to provide certain incentives to Getrag and Chrysler, and Chrysler and Getrag agreed to a number of obligations, including agreeing to notify Tipton County if the two automotive manufacturers were ever unable to reach complete agreement on the cooperative development of the project. If the two parties failed to reach complete agreement, Chrysler agreed to be responsible for reimbursing Tipton County for any and all third-party costs incurred in the project.

Before the public legal battles began, a bond purchase agreement was made September 15, 2008, for Getrag and Chrysler to each receive $5.5 million in bonds issued by Tipton County based on their expenditures for the project. Those bonds were issued September 16.

One day later, Chrysler advised Getrag that it would not provide the assurances that Getrag had requested to enable Getrag to obtain debt financing for the project, according to papers filed in the Getrag bankruptcy and the litigation between Chrysler and Getrag. Chrysler’s refusal to provide the requested assurances caused Getrag to send a “Failure Notice” advising Chrysler that Getrag could not obtain the necessary financing.

Chrysler’s court papers allege that Getrag should have obtained financing no later than June 2008 and that Getrag’s failure to obtain the financing breached the parties’ agreements.

Neither Chrysler nor Getrag advised Tipton County before the bonds were issued that the parties were not in complete agreement on project development, that the necessary financing had not been obtained or that critical aspects of their agreements were not fulfilled or finalized.

“Their own legal papers suggest that Chrysler was aware of the lack of a complete agreement well in advance of Tipton County issuing the bonds. In those papers, Chrysler alleges there was a breach by Getrag of the terms of the parties’ agreements, but Chrysler failed to notify Tipton County of those circumstances,” said Ken Ziegler, Tipton County Commissioner.

More than $44 million is owed to electrical, pipe fitting and mechanical contractors who worked on the project; 116 have filed liens against both Chrysler LLC and Getrag Transmission Manufacturing LLC. Several contractors are in danger of going out of business because of the unpaid bills.

Tipton County is a predominantly rural area with a population of about 16,000 people and an unemployment rate that had increased to 10 percent at the end of 2008.

In a February 26 response letter to Chrysler, the Tipton County Board of Commissioners said: “We find Chrysler’s failure to honor its obligations to the County particularly disturbing given that Chrysler is asking the citizens of Tipton and the entire nation to place continued faith in Chrysler by providing it with additional hard-earned federal income tax dollars.”


February 2007
Getrag and DaimlerChrysler sign a memorandum of understanding to develop and produce dual-clutch transmissions for DCX operations in North America

May 3, 2007
Commitment Agreement spells out terms among Tipton County, Getrag and Chrysler. Chrysler and Getrag agree to notify Tipton County if the parties are ever unable to reach complete agreement on the cooperative development of the project.

June 13, 2007
Permit issued for foundation construction

June 18, 2007
Official announcement that Tipton will be the site of a new $530 transmission plant to open in September 2009

October 2007
Road improvements nearly complete

December 21, 2007
Construction is suspended over the holidays, but does not resume pending negotiations between Chrysler and Getrag Transmission Manufacturing, LLC regarding pricing and volume of transmissions to be purchased by Chrysler

February 25, 2008
Construction resumes

September 15, 2008
Bond purchase agreement signed

September 16, 2008
$11 million in bonds issued, $5.5 million to Chrysler and $5.5 million to Getrag

September 17, 2008
Chrysler advises Getrag it will not provide assurances Getrag had requested to enable Getrag to obtain debt financing for the project

October 7, 2008
Chrysler files lawsuit accusing Getrag and a U.S. subsidiary of breach of contract and fraudulent misrepresentation

October 17, 2008
Talks between Chrysler and Getrag Transmission Manufacturing, LLC shut down after Chrysler rejects the financing structure Getrag secured to build the joint venture in Tipton

October 30, 2008
Getrag Transmission Manufacturing LLC and its German affiliate file a counter suit against Chrysler to recover costs associated with the Tipton project and reimbursement of all expenses incurred by GTM LLC and its suppliers in connection with the project

November 17, 2008
Getrag Transmission Manufacturing LLC files for bankruptcy protection

February 12, 2009
Tipton County Board of Commissioners officially requests return of bonds and reimbursement from Chrysler

February 24, 2009
Tipton County Board of Commissioners receives letter from Chrysler refusing County’s request

LINK: Tipton County Seeks Millions From Chrysler - Newsroom - Inside INdiana Business with Gerry Dick
1 - 9 of 9 Posts