The news of Ford India shutting down their two manufacturing facilities have been doing the rounds for some time, however, we refrained to write about the situation until we had an official statement on the same. The story has been confirmed with Ford India sharing a press release detailing out their plans for the Indian market and how this restructuring is going to pan out in the foreseeable future.
What Ford Management is saying
Locally manufactured cars like the Figo will stop with immediate effect
“As part of our Ford+ plan, we are taking difficult but necessary actions to deliver a sustainably profitable business longer-term and allocate our capital to grow and create value in the right areas,” said Jim Farley, Ford Motor Company’s president and CEO. “Despite investing significantly in India, Ford has accumulated more than $2 billion of operating losses over the past 10 years and demand for new vehicles has been much weaker than forecast.
“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.”
Anurag Mehrotra, president and managing director of Ford India, added: “Ford has a long and proud history in India. We are committed to taking care of our customers and working closely with employees, unions, dealers and suppliers to care for those affected by the restructuring.”
Ford India’s reason for the exit from local vehicle manufacturing
The engine plant at Ford’s Sanand factory
The reason for this decision was not an easy one for Ford as the company did investigate numerous other options that included partnerships, platform sharing, contract manufacturing and even the possibility of selling off its manufacturing plants (which is still under consideration) in order to keep business churning. As Anurag Mehrotra points out “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.”
The way forward for Ford in India
Global models will now be imported and go on sale in India
- Ford will bring in a range of their iconic global vehicles and electrified SUVs, such as the Mustang and Mustang Mach E, as CBUs to the Indian market, while ceasing local production and shutting down models like the Figo, Aspire, Freestyle, EcoSport and Endeavour once dealer inventories are sold.
- Ford will continue to provide customers in India with ongoing parts, service, and warranty support.
- Ford India will wind down vehicle assembly in Sanand by the fourth quarter of 2021 and vehicle and engine manufacturing in Chennai by the second quarter of 2022.
- 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.
- More than 500 employees at the Sanand Engine plant, which produces engines for export for the best-selling Ranger pickup truck, and about 100 employees supporting parts distribution and customer service, also will continue to support Ford’s business in India.
- Customers in India also will benefit longer term from the Company’s plan to invest more than $30 billion globally to deliver all-new hybrid and fully electric vehicles, such as Mustang Mach-E.
- 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.
- Ford India will maintain parts depots in Delhi, Chennai, Mumbai, Sanand and Kolkata and will work closely with its dealer network to restructure and help facilitate their transition from sales and service to parts and service support.
- Ford India will maintain a smaller network of suppliers to support engine manufacturing for exports and will work closely with other suppliers to ensure a smooth wind-down of vehicle manufacturing. Ford also will continue to rely on India-based suppliers for parts for its global products, and suppliers and vendors supporting Ford Business Solutions will continue to support the business as normal.