A Franklin auto parts maker is adding 73 manufacturing jobs in order to start making turbochargers, or devices that boost an engine’s power.
Mitsubishi Heavy Industries Climate Control in Franklin plans to hire the employees as part of a $12 million expansion and could add even more positions over time, president Tetsuzo Ukai said. The company will start hiring next year for jobs that are expected to pay $20 to $22 an hour, including benefits.
The Japan-based auto parts maker plans to increase its current Franklin workforce by about a third so it can make turbochargers in North America for the first time.
Franklin and the state of Indiana are offering the company a total of $1.4 million in tax breaks and cash, although the city’s incentives still need approval.
The company announced its expansion at the Statehouse in Indianapolis on Tuesday. Gov. Mitch Daniels and other state officials heralded Mitsubishi and eight other companies that plan to bring more than 2,500 jobs to Indiana duri the next few years.
Mitsubishi plans to expand its 200,000-square-foot facility of the east side of Franklin by about 10,700 square feet in order to make room for three assembly lines, Ukai said. The plant will make turbochargers for smaller, more fuel-efficient cars.
New federal fuel-efficiency standards, high gas prices and more energy-conscious car buyers are accelerating the demand for smaller engines, he said. Mitsubishi’s turbochargers will give those smaller, more fuel-efficient engines more pep.
The company decided to expand in Franklin because of its skilled workforce and proximity to automakers in both Detroit and the South, Mayor Joe McGuinness said. Franklin also benefited from having a high concentration of Japanese-owned companies, such as KYB Manufacturing and NSK Corp., he said.
“It’s a tremendous victory for Franklin,” McGuinness said. “This is going to get a large number of folks back to work and help underemployed people who want an opportunity to advance their careers.”
Franklin is offering the company a tax abatement, or property tax break, of $133,670 on the addition to its factory and another $455,083 tax break on the manufacturing equipment, McGuinness said. The business’s property taxes would be phased in over a 10-year period.
The city also has offered $150,000 toward construction costs, as an incentive for the new jobs and investment, McGuinness said. That money would come from the city’s tax-increment financing districts, which collect property tax dollars from new developments in certain areas and channel them into road and other infrastructure improvements.
Those incentives still would have to be approved by the economic development commission, the redevelopment commission and the city council, McGuinness said.
The Indiana Economic Development Commission offered the company $100,000 in training grants and $600,000 in state tax credits. But Mitsubishi would capture the full value of those tax breaks only if it hires the number of employees it has pledged during the next four years.
Currently, Mitsubishi Heavy Industries Climate Control makes air conditioning systems for cars at its factory east of Interstate 65.
Johnson County Development Corp. president and chief executive officer Cheryl Morphew said Mitsubishi is a success story. The entire automotive industry had struggled in recent years as vehicle sales sagged, but the Franklin-based parts maker has emerged from those difficulties and is growing again.
Mitsubishi laid off nearly 90 workers a few years ago, when local auto parts makers were cutting back during the recession. The company had shrunk to 42 employees in 2009, after it suspended production because one of its main customers filed for bankruptcy.
But the company has bounced back and currently employs about 220 workers in Franklin, general manager Bob Francis said.
The business’s focus has been on making air conditioners and air conditioner parts, such as compressors, for automakers such as General Motors.
But a new division of the company, Mitsubishi Engine North America, is coming to Franklin and will share space in the existing factory.
Mitsubishi has a new opportunity, largely because of new federal regulations that will require new cars to be more fuel efficient, Ukai said. For example, the standards require that cars get 54 miles to the gallon by 2025.
Smaller engines burn less fuel but also have less punch than what drivers may be accustomed to. But Mitsubishi’s turbochargers can give a 1.6-liter engine the same horsepower as a 2-liter engine, giving it more acceleration and torque while maintaining fuel efficiency.
Mitsubishi already makes and sells the turbochargers in Europe and Asia, but there wasn’t as much demand in the United States until recently, Ukai said.
“The demand for turbocharger is increasing,” he said. “We are now expecting getting more of our business from customers in the United States.”
At first, the company would produce an estimated 600,000 turbochargers a year in Franklin. But the goal is to double that production in a few years.
If that happens, Mitsubishi likely would add even more jobs in Franklin, Ukai said. The company plans to start with two shifts and could add a third at some point if demand allows, he said.
The goal is start production of the turbochargers in 2014.
About the expansion
Auto parts maker Mitsubishi Heavy Industries plans to expand and start making turbochargers in Franklin. Here’s a look:
Jobs: At least 73 through 2016, with potential to add more in the future
Wages: Estimated to be $20 to $22 an hour, including benefits
Investment: $12 million to expand eastside Franklin factory and add three new assembly lines
Expansion: The 200,000-square-foot building at 1200 Mitsubishi Parkway will grow by about 10,700 square feet
Why: The company plans to make 600,000 turbochargers a year to increase horsepower for smaller engines in more fuel-efficient vehicles.
Goal: The company hopes to eventually produce 1.2 million turbochargers a year in Franklin and sell them to automakers looking to comply with new federal fuel efficiency regulations.