Business Standard

Ford’s sudden brake leads to uneasy calm around plants

Company in talks with automakers to sell Chennai plant, says TN govt official

- SHINE JACOB, VINAY UMARJI & SHALLY SETH MOHILE

A few months from now Maraimalai Nagar, a sleepy satellite town located 45 kilometres from Chennai and home to the manufactur­ing facilities of Ford India and BMW India, will lose an important landmark — the Ford India factory.

A similar fate awaits the Ford factory in Sanand, 21 km from Ahmedabad. An uneasy calm surrounds the two units after the sudden announceme­nt by the Michigan-based automaker on Thursday to discontinu­e vehicle manufactur­ing in India.

Amid the gloom and doom, the Tamil Nadu government has provided workers at the Chennai factory a glimmer of hope as it has said it is in talks with an automobile company to take over the unit.

“Talks are on between Ford and another automobile manufactur­er and some other companies too. The state government will facilitate the smooth handover of the land, if they reach a

deal,” N Muruganand­am, principal secretary (industries), Tamil Nadu, told Business Standard.

Some of the potential suitors for the Ford units in both the states include Ola Electric, which has plans to get into the ecar

segment, French automaker Citroen, and Arrival—a British-american electric vehicle maker that has been considerin­g an India entry, said a person familiar with the plans. Even earlier, Ford had held talks with other auto firms for a sale or contract manufactur­ing agreement.

“The Sanand plant, in particular, which is quite state-of-the-art and geographic­ally well positioned for exports, could be a good buy for any new entrant,” said the person cited earlier. For its part, the Gujarat government too is closely observing the developmen­ts. “We are examining the issue in totality and will deal with all aspects appropriat­ely. The state and central government­s have supported Ford all through. The plant has been closed because of their internal reasons,” said Rajiv Kumar Gupta, ACS for industries and mines department of the state government. For now, the fate of more than 5,000 workers employed at both the units hangs in the balance and they feel let down.

“We were informed about the decision only yesterday after their public announceme­nt. They informed us about this only through mail. The management has called for a meeting on Monday and we want to listen to what they have to say,” said Arun Sanjivi, a worker at the body shop of the factory and also the secretary of Chennai Ford Workers Union.

The announceme­nt could not have been more ill-timed. The festive season kicked off on Friday with Ganesh Chaturthi.

Those employed at Sanand are anxious. Since the announceme­nt, they have been trying to reach out to their bosses at Ford India. “All the phones are switched off. So, we will only have clarity on Monday when we resume work,” said an anxious contractua­l worker on the condition of anonymity.

From nearly 500 cars a day with 5,000 workers, production at Ford India’s Sanand plant gradually fell to only 200 cars a day with 2,5003,000 workers. “Moreover, the plant was operationa­l for only six days a month though our salaries were being paid in full,” the worker said. Of those workers only about 900 are part of the union.

The plan is to negotiate with the management on Monday to let go of all contractua­l workers and absorb all the 900-odd workers in the union into the powertrain shop, said a person who is part of the union. The powertrain might be operationa­l for another couple of years to service Ford’s overseas plants, such as the ones in South Africa and Europe.

IIP growth dips to 11.5% in July

“The healthy sequential increase benefited from easing restrictio­ns and rising mobility, but was dwarfed by the continued normalisat­ion of the base,” said Aditi Nayar, chief economist at ICRA.

She, however, said the July sequential change in the IIP was much lower than the correspond­ing 17 per cent change in the generation of e-way bills (under goods and services tax, or GST).

“We believe GST e way bills represent continued inventory clearance as statewise restrictio­ns eased,” Nayar said.

Rahul Bajoria, chief India economist at Barclays, said the headline IIP was now short of July 2019 levels by a mere 0.3 per cent.

“We expect sequential growth recovery to persist broadly over the coming months,” Bajoria said.

Nayar said the manufactur­ing index in July 2021 (130.9) was nearly as high as the level in October 2020 (132.0) during last year’s festive season, which offers a glimpse into the strength of the revival after the second wave.

The important thing was that capital production grew 29.5 per cent in July, higher than the 26.6 per cent in the previous month.

Consumer durables growth declined to 20.2 per cent in July from 27.9 per cent in the previous month, and consumer non-durables continued to contract though the pace decelerate­d to 1.8 per cent compared to 4.3 per cent.

“The YOY contractio­n in consumer non-durables in July for the second month in a row struck a discordant note, although this was partly driven by an unfavourab­le base related to restocking after the first wave,” Nayar said.

Three of the 23 sectors showed a contractio­n in output in July, whereas it was six in the previous month.

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