Page 34 - The Indian EYE 091021

Business EYE SEPTEMBER 10, 2021 | The Indian Eye 34

not a good sign for economy and jobs as ford

motors pack up their india factories

Ford was one of the first global car companies to enter India in early 1990s; In 2017,

General Motors had announced it would stop selling vehicles in India

Our Bureau manufacturing plants, which is
still under consideration. “De-
New Delhi spite these efforts, we have not

n a decision that may have been able to find a sustainable
major impact on the econ- path forward to long-term prof-
Iomy, the Ford Motor Com- itability that includes in-country
pany has announced that it will vehicle manufacturing,” Meh-
shut its car factories in India but rotra said.
will continue engine manufac- The move will see many of
turing for export markets. the 4,000-odd permanent em-
Ford is the second US auto ployees of Ford India move out.
major after General Motors to “Ford will work closely with
shut plants in the value-con- employees, unions, suppliers,
scious market. “Ford restruc- dealers, government and other
tures India operations, to cease stakeholders in Chennai and
vehicle manufacturing in Chen- ter of next year — will not mean Ford said it took the deci- Sanand to develop a fair and
nai and Sanand, progressively end of services and after-sales sion after considering several balanced plan to mitigate the ef-
wind-down manufacturing of support for the roughly 10-lakh options, including partnerships, fects of the decision,” the com-
vehicles for export at Sanand customers it has in the country platform sharing, contract man- pany said.
plant by Q4 2021 and Chennai as its 300-odd dealerships will ufacturing with other makers, Dealers fear that apart from
engine/vehicle assembly plants remain open for service. and the possibility of selling its jobs at Ford, over 40,000 em-
by Q2 2022,” the company ployees at the company’s retail
tweeted on Thursday. points also face a threat around
“To continue engine man- india may have huge growth in their employment. Vinkesh Gu-
ufacturing for export. To grow high-income households lati, president of dealers’ associ-
Ford Business Solutions (FBS), ation FADA, said Ford dealers
focusing on engineering, tech- have invested around Rs 2,000
nology and business operations ndia could be home to growth in the next decade,” crore towards retail and service
centers of excellence. Remain the third-largest number said Mahima Chugh, a McK- infrastructure. “The retail fra-
home to Ford’s second-largest Iof high-income house- insey partner in Mumbai. ternity is really shocked to hear
holds globally after the Unit-
Some of the factors that will
salaried workforce globally,” it ed States and China by 2030 contribute to India’s growth sto- Ford’s announcement where it
added. with Mumbai likely to be the ry are rising high-income house- has said that it will shut down
Ford was one of the first glob- production,” FADA said.
al car companies to enter India fourth-ranked city in Asia for holds and shrinking household While the writing was on the
when the economy opened up the same. size, doubling of the consuming wall for several months, Thurs-
The development is set to class, seniors going online and
in early 1990s. In 2017, General be propelled by Asian con- the rise of e-commerce. day’s announcement brought
Motors announced it will stop sumers who are expected to In India, for instance, the finality to it.
selling vehicles in India as there account for half of global con- average size of households Ford’s losses to date stand
is no turnaround in its fortunes sumption growth in the next is shrinking with the country at $2 billion (it also effected a
even after struggling for over $0.8 billion non-operating write
two decades. decade, equivalent to a $10 tril- having witnessed a 16% de- down of assets in 2019), and the
Having invested over $2.5 lion opportunity, showed the cline, from 5.5 to 4.5 persons, company says it preferred to
billion in India, and with a pres- latest McKinsey research pa- from 1999 to 2015. In addition, invest money in markets where
per. In India, too, consumption by 2030, up to 55% of India’s
ence since 1995, Ford ended is expected to get a boost by population could belong to it can fetch returns than sink
2020-21 selling 48,042 units to $1.8 trillion during the period. the consuming class (spending further cash in India. Howev-
garner a 1.8% share of the pie. “Asian consumers continue more than $11 a day), up from er, the exit carries further cash
The company promised outgo for the company, which
that “restructuring” of its India to face challenges associated only 24% currently and 9% in is estimated at over $1.7 billion,
business — that will see its two with the COVID-19 pandemic, 2000 and the country may rep- including various settlements,
plants in Chennai and Sanand but are likely to contribute to resent 27% of Asia’s consum- apart from $0.3 billion in non-
half of all global consumption ing class.
shut down by the second quar- cash charges.

www.TheIndianEYE .com