Automaker Ford India will be shutting down its plants in India in Chennai and Sanand, Gujarat, and progressively winding down its operations in the country. The company announced that it will cease manufacturing in both plants — it will wind down manufacturing of vehicles for export at Sanand plant by Q4 2021 and in Chennai, its engine/vehicle assembly plants will be wound down by Q2 2022. It announced that it will continue manufacturing engines for export. With this restructure, Ford will focus on importing and selling vehicles such as the Mustang Coupe and Mustang Mach-E in India.
Chennai Ford Employees Union president Suresh told TNM that the company had started informing employees earlier today. Chennai has an assembly and engine plant, and both of them will be shut, he said. "Ford has announced it today, and they will subsequently talk to us [the union] about settlements for employees," he added. The closure impacts roughly 2,700 employees at the Chennai plant, according to the union's estimates. The union will work towards worker benefit, he added.
In a statement, Ford said that approximately 4,000 employees are expected to be affected by the restructuring. "Ford will work closely with employees, unions, suppliers, dealers, government, and other stakeholders in Chennai and Sanand to develop a fair and balanced plan to mitigate the effects of the decision," it said.
For customers, it said that full customer operations will continue with service, aftermarket parts and warranty support. For the cars it currently sells, the company said it will continue to do so till stocks last. "Sales of current products such as Figo, Aspire, Freestyle, EcoSport and Endeavour will cease once existing dealer inventories are sold," it said.
Ford Business Solutions, the company’s arm focusing on engineering, technology, and business operations centres of excellence will continue, and Ford said India will remain home to Ford’s second-largest salaried workforce globally. "With more than 11,000 team members currently in India, Ford Business Solutions plans to expand to provide more opportunities for software developers, data scientists, R&D engineers, and finance and accounting professionals, in support of the Ford+ plan to transform and modernize Ford globally," Ford said.
At its facility in Maraimalai Nagar near Chennai, Ford used to produce cars including the Ford EcoSport and Ford Endeavour. In the Gujarat plant, it produced cars such as the Ford Figo, Ford Aspire and more. Ford commenced operations in the country in 1995.
The move to wind down comes after the company had operating losses of more than $2 billion over the past 10 years and a $0.8 billion non-operating write-down of assets in 2019. In a statement, the company said the "restructuring is expected to create a sustainably profitable business in India".
Ford Motor Company CEO Jim Farley said, "I want to be clear that Ford will continue taking care of our valued customers in India, working closely with Ford India’s dealers, all of whom have supported the company for a long time. India remains strategically important for us and, thanks to our growing Ford Business Solutions team, will continue to be a large and important employee base for Ford globally."
The company said it tried partnerships, platform sharing, contract manufacturing with other OEMs, and the possibility of selling its manufacturing plants still under consideration), and it is due to them not working out that it is winding down operations. A joint venture that had been announced with Mahindra too had been called off earlier this year.
Employees union president Suresh said that employees knew that the closure was a possibility, as these efforts had not panned out.
Anurag Mehrotra, president and managing director of Ford India, said, “Despite these efforts, we have not been able to find a sustainable path forward to long-term profitability that includes in-country vehicle manufacturing."
“The decision was reinforced by years of accumulated losses, persistent industry overcapacity and lack of expected growth in India’s car market," he said.
Ford India said it will maintain parts depots in Delhi, Chennai, Mumbai, Sanand and Kolkata and work with its dealer network to restructure and transition from sales and service to parts and service support. It added that it will also continue to rely on India-based suppliers for parts for its global products.