Iconic American car maker Ford has announced a major restructure in its India operations. The company has said it plans bring to market some of its iconic global vehicles and electrified SUVs while ceasing vehicle manufacturing in India. The decision has been taken following accumulated 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. Ford says the restructuring is expected to create a sustainably profitable business in India. Addressing the need of its existing buyers, the carmaker has assured that it will continue to provide customers in India with ongoing parts, service, and warranty support.
As part of the plan, Ford India will wind down vehicle assembly at its plant in Sanand, Gujarat by the fourth quarter of 2021 and vehicle and engine manufacturing in Chennai by the second quarter of 2022.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 the company’s business in India. However, approximately 4,000 employees are expected to be affected by the restructuring. Ford says it will work closely with employees, unions, suppliers, dealers, government, and other stakeholders to develop a fair and balanced plan to mitigate the effects of the decision.
The carmaker will begin importing and selling vehicles in India, including the Mustang coupe. It says customers in India also will benefit longer term from its plan to invest more than $30 billion globally to deliver all-new hybrid and fully electric vehicles, such as Mustang Mach-E. However, sales of current products such as Figo, Aspire, Freestyle, EcoSport and Endeavour will cease once existing dealer inventories are sold out. Ford India said it took these restructuring actions after investigating several options, including partnerships, platform sharing, contract manufacturing with other Auto manufacturers, and the possibility of selling its manufacturing plants, which is still under consideration.
The company has said it will focus on growing its Ford Business Solutions capabilities and team in the country, as well as engineering and engine manufacturing for exports. 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.
“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. Despite these efforts, we have not been able to find a sustainable path forward to long-term profitability that includes in-country vehicle manufacturing,” Mehrotra said. “The decision was reinforced by years of accumulated losses, persistent industry overcapacity and lack of expected growth in India’s car market.”
Ford says it 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.
The writer is Senior Editor at carandbike.com
