Published: September 06, 2008 12:09 am            

Kokomo hoping for Delphi investment

Company asks city council for tax abatement

Delphi Electronics & Safety could invest up to $160 million in its Kokomo operations over the next four years, if the Delphi Corp. division chooses to build its next-generation electronics here.

Monday, Kokomo Common Council will consider a tax abatement, filed with the city Aug. 22, in which Delphi officials ask for a tax break on the potential new investment.

Kokomo Mayor Greg Goodnight said the investment could retain 3,000 or more Delphi jobs in Kokomo.

“The best way to create jobs tomorrow is by retaining jobs today,” Goodnight said Thursday. “With this investment, Delphi has shown a commitment to performing new research and manufacturing new products here in Kokomo.”

Delphi spokesman Milton Beach confirmed the company is looking at Kokomo as a potential site for manufacturing “power electronics” for the hybrid vehicle market.

“We’re considering investing $160 million over the next four years,” Beach said. “Our objective in doing that is to improve the competitiveness of operations here, which would help retain jobs at the Kokomo site.”

The new technologies would include battery packs for hybrids, next-generation engine control modules, research and development support equipment and validation testing equipment to support battery operated technology.

Delphi spokesman Jay Jiang said Delphi was looking at other U.S. operations, as well as operations in Mexico as potential sites for the new investment, “but ideally, if we can produce it here in Kokomo, it’s the best.”

“The logistical costs are huge if we manufacture in Mexico, and Kokomo is a very good place because it’s where our operations are centered,” he said. “But at the same time, we need the city’s help.”

Kokomo Common Council president Mike Kennedy, D-At Large, said he had little doubt the abatement will pass.

Delphi’s E&S division announced last month it was cutting 600 salaried positions, the bulk of the cuts coming from Kokomo.

Supervisors had until the end of September to announce which employees would be separated from the company, but many employees already know.

Thursday, Beach and Jiang said 470 of the job cuts would be made at E&S’ Kokomo headquarters.

Winning the hybrid technology manufacturing capability would be a huge coup for a city battered by the downturn in the U.S. automotive industry.

“They are still investing in our community, and they haven’t closed their doors, and I’m encouraged by that,” city development director Debra Cook said Thursday.

In documents filed with the city, Delphi estimated the total value of new equipment added through the investment would be about $60 million, once the replacement of older equipment was factored in.

Typically abatements only provide a discount on the taxes to be paid on new assessed value, meaning communities do not lose tax revenue through the abatement process.

The abatement, if approved, would be for 10 years, with taxes on the new equipment to be phased in over that period.

The city also has a clause in the abatement which would allow the city to make a claim against Delphi for any abated taxes, in the event the company does not maintain the level of employment promised.

Delphi officials estimate they’ll retain about 3,000 jobs here over the period of the abatement, if the investment is made in Kokomo.

Before the most recent job cuts at Delphi’s Kokomo operations were announced, Delphi employed about 4,000 in Kokomo. The company, which filed for bankruptcy in 2005 and has still not emerged, employed more than 6,000 here before taking a downturn.

Scott Smith may be reached at (765) 454-8569 or via e-mail at scott.smith@kokomotribune.com

        

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