Ford to spend R 4,000 cr on two plants at Sanand

Written by fe Bureau | Ahmedabad | Updated: Jul 29 2011, 08:13am hrs
American automobile giant Ford Motors is all set to become Nanos neighbour in Sanand, Gujarat. The state, touted by many as the ultimate investment destination, has moved a step closer to realising its chief minister Narendra Modi's dream of becoming the country's automobile hub with Ford inking two MoUs with the state government to set up an integrated manufacturing facility comprising a state-of-the-art manufacturing facility and an engine plant near Sanand at an estimated cost of $ 1 billion.

Along with its existing 17 years old facility at Chennai, the two Ford facilities in India together are projected to be one of the highest investments made by Ford outside America totalling $2.1 billion as part of its strategy for expansion into India to cater to the fast growing markets in developing countries like India. In Tamil Nadu, the American auto major has a vehicle manufacturing facility and is expanding its engine plant there.

Ford will invest approximately R4,000 crore in the two plants at Sanand which would include stamping, body, paint and assembly operations for vehicle manufacturing as well as assembly operations for engine manufacturing. The vehicle manufacturing plant will have an initial annual capacity of 240,000 units and the engine plant will have an initial annual capacity of 270,000 engines. Construction is scheduled to begin by this year end with the first vehicle and engine scheduled to come off the line in 2014. According to a government communique, Ford will bring in the latest environment-friendly technology and cooperate with the state government in setting up world class skill development centres in the state with potential for direct employment to 5,000 and indirect employment to 25,000 people.

The integrated manufacturing facility at Sanand would be set up on a 460 acre plot adjacent to Tata Motors' mother plant for manufacturing its small car, Nano. In addition, the state government has reserved another 150 acres in the vicinity for ancilliary industries with additional job opportunity for 6,000 people. With GM and Nano already having their facilities in Gujarat and several other auto majors including homegrown Maruti Suzuki and French car maker Peugeot as well as two wheeler manufacturers such as Hero Honda and Bajaj eyeing prospects of setting up bases in Gujarat, the state is all set to emerge as a leading auto hub. The Ford company envisages exporting 25% of the production from the facility, paving the way for Gujarat to emerge as an automobile export hub, said a government official.

Briefing the media following the inking of the MoUs, Ford India president Michael Boneham said Ford had zeroed in on Gujarat for setting up its second major facility in India after looking at a large number of states, all of whom were keen to have us.

We finally settled on Gujarat primarily because of its geographic positioning. Since we already have a plant in the South, we were looking at a place in the north western part which could provide us easy access to the critical northern and western regions where the largest share of the country's passenger car industry exists. At the moment, it takes 10 days for us to deliver a car to any of the places in the north or west, he said. Access to ports and availability of educated and skilled manpower were also important criteria for selection. Ford Asia-Pacific-Africa president Joe Hinrichs said the deal had been worked within the open policy structure of the Gujarat government.

He also added that since most governments are more than willing to offer incentives to auto majors in view of the competitiveness of the industry, incentives were not key to our decision making process.

However, Gujarats famed pro-business environment also swung the deal in its favour. The government here is very focussed on implementation and getting things done. Apart from that, the state has excellent infrastructure like roads and ports, said Hinrich adding that this is an investment into the future of Ford globally. These new facilities will help us reach our goal of increasing worldwide sales by nearly 50% by mid-decade to about 8 million vehicles per year. Ford is bringing more than 50 new vehicles and powertrains to its Asia-Pacific and Africa region by mid-decade. Almost 60-70% of Ford's growth is

expected to come from this region over the next ten years, Hinrichs said.