Run off the road, Ford workers face up to a grim reality
CHENNAI: He remembers that October morning as the most important of his life. One month after Ford unveiled its new hatchback, Figo, in September 2009, 19-year-old Vijay Kumar waited in line with many others at the company’s factory on the outskirts of Chennai, nervous and fidgety. He was hungry, having arrived on a bus from his home town of Theni, tucked away in the hills over 500km kilometers away. The first question the interview panel asked him was if he had eaten. He told them he hadn’t, because he didn’t want to be late.
After testing his knowledge on the technicalities of automobiles, about the company, and the specifics about the entry level job he was applying for, the panel closed the interview. The last thing they told Kumar was that there was a nice canteen with free food, and he should eat before he headed home. “I loved that they cared,” said Kumar. Twelve years later, Kumar found out that Ford, the company that was his life for over a decade, would soon be shutting down. Via Whatsapp.
“I thought it was a fake message,” he said. “This is what our relationship has come down to? They couldn’t even inform us in person.” After his day shift which ended at 3.15pm, he gathered with his colleagues at the Centre of Indian Trade Union (CITU) office, 1km from Ford’s plant. The sense of helplessness was universal.
On September 9, Ford Motor Company announced that it would be shutting down its manufacturing facilities in India. “As part of the plan, 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,” the company said in a statement. The Michigan-headquartered company arrived at this decision to close down due to the accumulated operating losses of more than $2 billion over the past 10 years in India, a $800 million nonoperating write-down of assets in 2019, persistent industry overcapacity, and lack of expected growth in India’s car market.
Ford’s exit follows other global majors Harley Davidson and General Motors that quit in 2020 and 2017 respectively. Despite exploring several restructuring options, the company wasn’t able to find “a sustainable path forward to longterm profitability that includes in-country vehicle manufacturing,” said Anurag Mehrotra, president and managing director of India, in the statement.
Ford entered India in the early 1990s, ahead of even Hyundai, but never acquired the scale of operations or range of products that could make it profitable. It was late with its small car; did not become a serious player in sedans; and missed the economy-suv (or popular SUV) boom that benefited latecomers such as Renault.
The statement on its exit was issued by the company at 3:28 pm from its Gurugram office. In Chennai, first word from the management to the Chennai Ford Employees Union came half an hour before that. Selvaraj Kannan, former president of the CFEU which has 2,450 members, said, “They asked five officer-bearers from the union to come to the company at 1pm on September 9 and told them that they’re going to close down and there will be no change in that decision.”
With no time for the information to disseminate, most employees, like Vijay, learnt about the news that would change their lives through a phone call, or a Whatsapp message.
Ford employs about 182,000 people worldwide. In Chennai, there are 2,638 permanent employees and around 2,000 employees on contract. Besides them, there are a sizable number of employees from other ancillary companies who work exclusively to supply parts for Ford vehicles.
Experts estimate that at least 4,000 MSMES will be affected by Ford’s decision to close. “In any auto industry, the ratio is that for every one direct employee, there will be four indirect employees and two gig workers from service providers. Close to sixteen thousand workers overall face an income loss,” said KE Raghunathan, Convenor of Consortium of Indian Associations (CIA) who was formerly the national president of the All-india Manufacturers’ Organisation.
There are about 2,700 auto ancillary units in Tamil Nadu for which the entire turnover is contributed by Ford, Raghunathan estimated. Besides, the shutdown will also take away jobs of services providers that had mushroomed around Ford’s now iconic address in Maraimalai Nagar.
Mohammad Meeran, for instance, runs a tyre shop and makes ₹3,000 a day, on the highway that connects Chennai to other districts in Tamil Nadu. Right next to his shop is a bus stop that is a landmark. The Ford bus stop. Half his business, he said, comes from Ford’s employees.
Since the factory reopened on September 13, Meeran has had company – local police stationed on Henry Ford Road, anticipating trouble. On September 14, CITU led a two-hour protest, beseeching the company to change their minds. “Zero-chance, the management told us,” said Selvaraj.
The Good Days
The sense of an impending layoff seems surreal because of what Ford stood for in Tamil Nadu. There was social capital attached to working for the company, paid back in no mean measure by the organisation itself, according to employees. Kumar’s first salary in 2009 as a 19-year-old was ₹1,750 a month – enough only for rent and food. When a roommate, earning twice as much, offered him a job at his company, Kumar declined.
The decision paid off. Three years later, Kumar was made a permanent employee, earning ₹18,000 a month, while his friend earned less than half of that. Cut to 2021, and Kumar earns a salary package of ₹8 lakh a year. In Tamil Nadu, progression like that was unheard of. “My family is really poor but Ford was my backbone,” Kumar said. In his time at Ford, Kumar paid for his younger sister’s wedding, provided for his parents in the village, got married, and is now father to a one-year-old boy.
His shifts alternated between morning and evening, giving him the flexibility to study further. He came to Ford with a diploma in automobile engineering and has been studying a part-time B.tech course in mechanical engineering at SRM university.
It was after 2005 that Ford began to focus on hiring those like Kumar, with a diploma in automobile engineering. But between 1998, when Ford launched, and 2003, they largely hired unskilled workers who had studied up to Class 12, training them exclusively for work with the company.
Joseph (who goes by one name), from Dindigul district, was hired from a recruitment camp in Madurai in 2000. It changed not just his professional life, but his social status. In 2005, the company sent Joseph to their automobile plant in the Philippines. “It’s a royal company,” his father would say. Banks were calling them to avail home loans. Families were happy for their daughters to marry a man from Ford. The employees even got to show off their work life. Annually for one day, each employee was allowed to bring invitees who could be family and friends to tour the company. Even if Joseph wanted to complain about the company, his family always reminded him Ford had changed his life. “Everyone is now dismayed,” he said.
The rise in Tamil Nadu
Ford entered the India market four years after the country’s 1991 reforms push, the first global car maker to invest near Chennai when the late J Jayalalitha was chief minister of Tamil Nadu. Soon after, even as the ruling dispensation changed and M Karunanidhi took over, other global giants such as Hyundai, BMW, Daimler, and Renault-nissan, followed, making the city a car-making hub. Official estimates show that the industry grew to 200,00 direct employees, and 600,00 indirect employees. According to the state industries department, Tamil Nadu accounted for 45% of India’s motor vehicle/car exports in 2017-18 and 35% of India’s auto component production and is the largest tyre manufacturing state.
Though Ford partnered with Mahindra & Mahindra during its entry, the company chose to set up outside Chennai, after it was actively wooed by a state government that ensured a supportive political environment, and reassured by the connectivity of an international airport, two seaports, and plenty of local labour.
The Anxious Now
With Ford sure to exit Chennai by June 2022, most employees believe that no monetary package can compensate for the loss that is on the anvil, with the employee union set to argue for job guarantees. “Now the workers will have to go back to their villages and struggle again. We have all ended up with health issues like back pain and knee pain due to long hours,” P Senthil Kumar, general secretary of the employees union said.
The union has approached the state government to intervene to ensure that the plant isn’t closed down. In the middle of September, Stalin met with industries minister Thangam Thennarasu but the government has thus far kept its cards close to its chest. “Ford is in talks with a few potential buyers and it is for them to decide on the sale of their manufacturing facilities,” said a senior government official who didn’t wish to be named. “Since Chennai has an ecosystem for automobile manufacturers with ancillary units in the surrounding regions, we hope someone will buy the factory and run it. The situation is evolving.”
A spokesperson for Ford said that they had started discussions with the employees union. “We will work closely with unions to arrive at a fair and balanced separation package for represented employees who will leave our business,” the spokesperson said. “We plan to serve customers in India with must-have, iconic vehicles, including the Mustang coupe. Customers in India in the future will also benefit from Ford’s plan to invest more than $30 billion globally to deliver allnew hybrid and fully electric vehicles, such as Mustang Mach-e that we look to bring to India in the future,” the representative added.
Raghunathan said that the need of the hour is intervention by the state to protect jobs. “The government can provide a one time subsidy of 10% of an MSME’S last turnover to reduce their burden of settlement. If the 300-odd ancillary units partly dependent on Ford want to improvise their infrastructure by reinvesting in their tools for a different client, they could be given a subsidised rate of interest and enhanced loan repayment capacity. If a new company is willing to re-employ the existing workers, the state could offer incentives like paying the employees’ provident fund and ESI for five years,” he said.
In the here and now, P Senthil Kumar, general secretary of the Employees Union is worried about the immediate future of the workers. Three men, employed by Ford, have seen their engagements called off, a throwback to when Standard Motor Products of India Limited shut shop in 1994. Back then, “marriages were called off and people died by suicide,” another trade union member said on condition of anonymity. “That’s what is worrying us.”