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Talks ongoing to convert Ford’s Chennai factory into EV export hub

The state government has begun preliminary talks on how the Chennai plant could be made into EV manufacturing base for the purpose of exports.

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US car major Ford Motor Company, which is working on its India manufacturing exit plan, has said the company was exploring the possibility of using a plant in India as an export base for EV manufacturing. The project, however, was in the exploration stage and discussions are ongoing, it said.

Sources in the Tamil Nadu industry department said that officials have been in constant discussions with the Ford management on the issue of the Chennai plant as it impacts close to 2,600 employees. They said that state government has begun preliminary talks on how the Chennai plant could be made into EV manufacturing base for the purpose of exports.

Though Ford has been primarily looking for a third party firm to take over its plant in Chennai, but it appears the company has been unsuccessful so far in its efforts. The company had previously said that it has been making all out efforts to take care of those who were hit by the winding-up decision, as the deadline nears for the curtain to drop on the local production of vehicles.

After Ford found a place in the Centre’s list of companies which had qualified for performance-linked incentives for electric vehicles, it started exploring the possibilities to convert the Chennai plant into an EV production base. A Ford India spokersperson told FE: “We continue to explore alternatives for our manufacturing facilities. This includes exploring the possibility of using a plant in India as an export base for EV manufacturing. The project, however, is in the exploration stage and with discussions ongoing, we don’t have anything additional to share.

”Ford India’s previously announced business restructuring is continuing and it will continue manufacturing operations in Chennai till the second quarter of 2022.“We continue to remain engaged with our employees & union representatives on all outstanding matters, including compensation. Given the ongoing nature of the discussions, we have nothing further to add or share at this point. As we hold dialogue with the union, we continue to have all manufacturing employees on the rolls,” he said.

The unions at Chennai and Sanand plants have been demanding job protection in the event of a third party taking over the plants. However, the management has understood to have initiated discussions on the compensation package parallelly, in case, if it has to close down the plants.

There were reports recently that Tata Motors is likely to take over the Ford India’s passenger vehicle manufacturing plant in Sanand. While both the companies have submitted a consented proposal for transfer of ownership,  a high-powered committee appointed by the state government will give a nod to the proposal, clearing the pathway for Tata Motors’ takeover of the plant, the report had said.

Faced by mounting losses, Ford had decided to cease local vehicle manufacturing in India, as part of its India restructuring announced in September 2021. Despite investing significantly in India, Ford had accumulated more than $2 billion of operating losses over the past 10 years and demand for new vehicles has been much weaker than forecast.

As part of exiting local vehicle manufacturing in India, Ford planned to wind down vehicle assembly in Sanand by the fourth quarter of 2021 and vehicle & engine manufacturing in Chennai by the second quarter of 2022. In India, Ford India has four vehicle & engine plants in Chennai and Sanand. Ford India decided to continue operating the engine plant in Sanand while closing down the other three plants. The company had said that it is exploring the possibility of selling its manufacturing plants. Close to 4,000 employees, both in Chennai and Sanand plants, have been expected to be affected by the decision of Ford to cease India manufacturing.

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