Rolls-Royce will put $600M into Indianapolis operations

Rolls-Royce is investing almost $600 million in its Indianapolis operation – the largest U.S. investment the company has made since 1995.

The funds will be used to overhaul the Rolls-Royce facilities at Tibbs Avenue and Raymond Street. The redevelopment, which includes new manufacturing and assembly operations, will bring the aerospace and defense contractor up to date with other Rolls-Royce holdings across the world.

The hefty investment does not come with the immediate promise of new jobs. Company officials, however, said it will increase the company’s competitiveness, which could lead to growth in Rolls-Royce’s ranks down the line.

“It was critical we all be sure this was the right investment for Rolls-Royce,” said Marion Blakey, president and chief executive officer of Rolls-Royce North America. “I suspect part of the reason everyone has been so excited about it is the magnitude of the investment.”

About $35 million of the redevelopment will be covered by economic development incentives from the city and state. Those incentives include tax credits and a skills enhancement grant.

The five-year project to modernize the Indianapolis location is already under way, and will reduce utility costs and consolidate operations. The buildings at the facility date back to World War II.

“We will modernize our local manufacturing operations to the highest industry standard,” said Phil Burkholder, president of Rolls-Royce Defense Aerospace North America. “We will invest in gas-turbine technology required to design and develop the products that will fill those factories. In just a few years, the Rolls-Royce facilities in Indianapolis will rival any of our other company locations around the globe.”

The investment is more than what Rolls-Royce paid for Allison Engine Co. in 1995, Blakey said.

“Any investment in the future of Rolls Royce here in Indianapolis is a positive indicator of the dedication and hard work our Members have put forth,” UAW Local 933 President Brian Fisher said. “We remain cautiously optimistic that the 244 UAW Members still on layoff will have the opportunity to return to work.”

Rolls-Royce employs 4,000 people in Indianapolis. About 1,050 of those people work in production and 1,400 are engineers.

Gov. Mike Pence said Rolls-Royce’s announcement points to a business-friendly climate in Indiana.

“A company that would grow anywhere, invest anywhere has chosen the state of Indiana and the city Indianapolis and we are truly grateful from the bottom of our hearts,” Pence said.

Gary Burtless, an economic expert at The Brookings Institution, a Washington-based think tank, said economic development incentives sometimes work “in the sense that localities offering generous incentives can often attract businesses that would locate in another jurisdiction.”

Other recent investments by Indiana businesses include a $1.2 billion expansion earlier this year of General Motors Co.’s pickup truck assembly plant in Fort Wayne, a $40 million increase at Honda’s Greensburg facility in 2012 and a $100 million investment by Toyota in its Princeton operation.

Subaru also announced a $140 million expansion at the end of September.

Call Star reporter Kris Turner at (317) 444-6047. Follow him on Twitter: @krisnturner.