Ford made an announcement today that it will be restructuring its operations in India. The automaker plans to expand its Chennai-based Ford Business Solutions team. If we talk about the plan, Ford will wind up the vehicle assembly in Sanand by the end of 2021 followed by vehicle & engine manufacturing in Chennai by the second quarter of 2022. However, the automaker will continue to provide service, ongoing parts, and warranty support to the customers in India.
The main reason for Ford to stop its manufacturing operations in India due to the unsustainably low utilization of the plant capacity. The Sanand and Maraimalai Nagar plants have a capacity of producing 4,00,000 units annually. However, the automaker has been able to produce only 80,000 cars in the last few months with half of those being made to export. The highlight here is that the Sanand plant was built to meet Ford’s global demand. With such low output figures, it has been expensive to manufacture cars for our market profitably at the aforementioned plant. The Maraimalai Nagar facility, on the other hand, allowed for more cost-effective manufacturing. However, it was difficult to sustain it as well. The brand’s most popular models Ecosport and Endeavour are manufactured here.
“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. 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,” as commented by Jim Farley, Ford Motor Company’s president and CEO.
Ford will continue to have its presence in the country. It will expand its business solution teams that will further support the brand globally. The aforementioned team will focus on technology, engineering, and business operations. Besides this, the company claims that India will remain Ford’s second-largest salaried workforce in the global market.