4,000 employees to be affected
US-headquartered Ford on Thursday announced a restructuring of its Indian operations, under which the company will stop manufacturing vehicles at two of its plants in the country, resulting in the loss of nearly 4,000 employees.
However, the company is not exiting the India market completely, and will focus on its ‘Ford Business Solutions’ as it seeks to build a “sustainably profitable” business in the country.
“Ford India will immediately stop manufacturing vehicles for sale in India…[the company] The company said in a statement, it will cease vehicle assembly at Sanand by the fourth quarter of 2021 and vehicle and engine manufacturing in Chennai by the second quarter of 2022.
The company said it took these restructuring actions after examining a number of options, including partnerships, platform sharing, contract manufacturing with other OEMs and the possibility of selling its manufacturing plants, which are still under consideration.
Ford India Chairman and Managing Director Anurag Mehrotra said, “Despite these efforts, we have not been able to find a sustainable path to long-term profitability, which includes manufacturing vehicles in the country.” Due to accumulated losses over the years, persistent industry overcapacity and lack of expected growth in India’s car market.
Mr Mehrota said, “India remains strategically important to us and will continue to be a large and important employee base for Ford globally, thanks to our growing Ford Business Solutions team.”
Ford said it will continue to work closely with employees, unions, dealers and suppliers to care for those directly affected. It reported that India would continue to be home to Ford’s second-largest salaried workforce globally, and that in addition to Ford Business Solutions, Ford India would continue manufacturing engines for export, as well as full customer support operations with service, aftermarket parts and warranty support. Will keep
Ford plans to expand its 11,000-employee business solutions team in India in the coming years to support Ford globally. The team will focus on the Engineering, Technology and Business Operations Center of Excellence.
It also said that more than 500 employees at the Sanand Engine Plant, which produces engines for export for the best-selling Ranger pickup trucks, and about 100 workers support parts distribution and customer service, in India. Will continue to support Ford’s business.
The company said that it plans to serve customers in India with iconic vehicles including the Mustang Coupe. “Customers in India will also benefit in the long run from the company’s plans to invest over US$30 billion globally to deliver all-new hybrid and fully electric vehicles like the Mustang Mach-E,” it added. .
Ford said it will continue to provide ongoing parts, service and warranty support to customers in India.
The decision follows accumulated operating losses of more than $2 billion over the past 10 years and a non-operating write-down of $0.8 billion of assets in 2019.
Ford India will maintain parts depots in Delhi, Chennai, Mumbai, Sanand and Kolkata and work closely with its dealer network to help facilitate their transition from sales and service to parts and service support. It will also maintain a small network of suppliers to support engine manufacturing for export and work closely with other suppliers to ensure a smooth breeze of vehicle manufacturing.
“Ford will also continue to rely on India-based suppliers for its global products, and the suppliers and vendors that support Ford Business Solutions will continue to support the business in general.”
“In connection with this announcement, Ford currently expects to record pre-tax special item charges of approximately $2.0 billion, which includes approximately $0.6 billion in 2021, approximately $1.2 billion in 2022, and the balance in subsequent years. Within that total there will be about $0.3 billion in non-cash charges including accelerated depreciation and amortization. The remaining cash charges of approximately $1.7 billion will be paid primarily in 2022 and will be due to settlement and other payments.
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