Introduction
Ford India is in the midst of a strategic reconsideration, contemplating a departure from its initial decision to sell the Chennai plant. This deliberation signals a potential resurgence in the Indian market. The recent termination of a deal with the JSW group has triggered speculation regarding the fate of Ford's manufacturing facility in Maraimalai Nagar.
Exploring Alternatives for the Chennai Unit
Within the corridors of Ford India, there is an active exploration of alternatives for the Chennai unit. This includes the intriguing possibility of repurposing the facility for exports or, notably, making a bold re-entry into the dynamic Indian automotive market. This shift in approach comes after negotiations with potential buyers, including the JSW group, Mahindra, and Vietnamese electric vehicle maker Vinfast, failed to materialize into concrete deals.
Interest from Potential Buyers
The JSW group had contemplated the acquisition of the Ford unit as part of its strategic entry into the electric vehicle segment. Simultaneously, Vinfast, having allocated $200 million for global expansion in India and Indonesia, was actively considering establishing a manufacturing unit within the country. Additionally, key players like Ola Electric, Hyundai Motor India, Tata Motors, and MG Motor have engaged in multiple discussions with Ford India’s management over the past two years.
Strategic Location and Supplier Ecosystem
The location of the Chennai plant in Maraimalai Nagar is strategically advantageous due to its proximity to ports and major metropolitan areas. Insight from an industrial source familiar with the supplier ecosystem reveals that the shutdown of the Maraimalai Nagar factory had minimal impact on suppliers. Many suppliers also serve other automotive giants like Maruti and Hyundai. The complexity of ongoing discussions about the plant’s future is heightened by the fact that the ownership of the land currently remains with Ford India.
Cost of Closure and Severance Packages
Remarkably, the closure of the Maraimalai Nagar factory reportedly incurred a cost of approximately Rs. 1296 crores for Ford’s India arm. This expenditure was attributed to a severance package for 2592 workers, negotiated between unions and the company. The severance deal ranged from Rs. 34.5 lakhs to a maximum of Rs. 86.5 lakhs per employee.
Employee Perspective and Current Status
Suresh S, the president of the former employees’ Union of Ford India, sheds light on the employee perspective. He stated, “All the employees have opted for a severance package. We have not heard anything about the current development of a comeback from our sources.”
Plant Overview and Strategic Appeal
The Chennai unit, sprawling across 350 acres, boasted an annual production capacity of around 2,00,000 vehicles and 3,40,000 engines. Its strategic location, being only 50 km away from Chennai port and 74 km from Ennore port, renders it an attractive destination for investors. Additionally, its accessibility to Bengaluru, just 320 km away by road, adds to its appeal.
From Withdrawal to Possible Comeback
The uncertainty surrounding the Maraimalai Nagar plant commenced on 9th September 2021 when Ford announced its phased withdrawal from India. Now, with the possibility of a comeback on the horizon, industry watchers are on the edge of their seats, eagerly awaiting Ford’s next move and the potential impact it may have on the Indian automotive landscape.