Ford India keeps comeback plans open, reassessing Chennai plant's future

Ford India may be reconsidering its decision to sell the Chennai plant and evaluating options for utilising the facility either for exports or a comeback to the Indian market, as the American car major called off a deal with the JSW group.

When asked about the possibility of a comeback to the Chennai unit, a source said, “We continue to explore alternatives for our manufacturing facility in Chennai.” The Sajjan Jindal-led group had considered acquiring the Ford unit as one of its options to enter the electric vehicle segment. Earlier, Ford India had several rounds of talks with players like Mahindra and Mahindra and Vietnamese electric vehicle maker Vinfast for selling the plant. However, none of these deals materialised. VinFast was exploring options to establish a manufacturing unit in India and had allocated $200 million for its global expansion in India and Indonesia.

Companies such as Ola Electric, Hyundai Motor India, Tata Motors, and MG Motor also engaged in multiple rounds of discussions with Ford India's management over the last two years. “For Ford India or any other player, Maraimalai Nagar is a good deal as it has proximity to ports and the two metropolises. Moreover, we believe that Ford may want to mark its presence in the third-largest vehicle market after China and the US. For suppliers too, this may be a good sign. The majority of the suppliers were also dealing with other companies like Maruti and Hyundai, so Ford's exit had no major impact on many of them,” said an industrial source, close to the supplier ecosystem. The ownership of the land is currently with Ford India.

Interestingly, the shutdown of the Maraimalai Nagar factory might have cost Ford’s India arm around Rs 1,296 crore in the form of a severance package only, through which 2,592 workers benefited. As per a deal reached between unions and the company, the cumulative severance for each employee ranged from Rs 34.5 lakh to a maximum of Rs 86.5 lakh. This translated into an average of Rs 44.8 lakh per employee.

“All the employees have opted for a severance package. We have not heard anything about the current development of a comeback from our sources,” said Suresh S, president of the former employees' Union of Ford India.

Uncertainty about the package at Maraimalai Nagar started on September 9, 2021, when Ford announced it was phasing out its units in India and leaving the country. The Chennai unit of Ford, spread across an area of 350 acres, had an annual production capacity of around 200,000 vehicles and 340,000 engines. For any investor, Maraimalai Nagar is considered a lucrative destination as it is hardly 50 kilometres away from Chennai port and 74 kilometres from Ennore port. In addition to its proximity to Chennai, the plant is easily accessible to Bengaluru too, which is only 320 kilometres away by road.