It was precisely on this date — September 9 — last year when Ford Motor Company announced that it would stop manufacturing cars in India.
Fast forward to the present, and the job is still half done with one plant at Sanand in Gujarat sold to Tata Motors, while the fate of the other and older facility at Maraimalai Nagar near Chennai is still hanging in the balance. Ford has set in motion a separation scheme for the 2400-odd employees, which will be open until September 23.
On the face of it, it is quite generous given that the package is equivalent to 130 days for every year spent in the company and can translate into anything between INR 40 lakh and INR 85 lakh depending on the hierarchy of the employee concerned. Yet, will it do the trick in getting everybody on board and pave the way for a smooth exit? That is the million-dollar question, and not too many people have a clue as to what the answer will be.
One thing is very clear, though: this is the last offer from Ford, and it is not going to come back to the table with a revised one going by what top industry sources say. Will this hardcore reality still be enough for the workforce to accept it, or will a section of employees persist with further negotiations? The company is in no mood to reconsider a higher package, and the writing is clearly on the wall.
Tamil Nadu Hopes For A Smooth Exercise
According to sources, a meeting with the Tamil Nadu Labour Commissioner may also happen during the next few days, and how this pans out will determine the next course of action. The State will look for a smooth exercise where anger does not spill over into the streets. Plant closures inevitably leave behind a path of anxiety and despair which can then lead to needles violence, as has been the case with companies like Maruti Suzuki in the not-so-distant past.
Tamil Nadu would ideally like to have the Ford story end on a calmer note since this will also play a role when it comes to attracting fresh investments in the auto space. The State has been at the forefront in earlier years when it came to bagging big brands such as Hyundai, Ford, Renault-Nissan, Daimler Truck, BMW, Citroen, Yamaha and BYD.
The coming years will see new dynamics in areas like electrification, where Tamil Nadu would like to position itself as an ideal destination for business. It is in this background that a smooth transition at Ford becomes imperative, and this is where the bureaucracy will need to pull out all the stops in keeping tempers in check.
PLI Scheme
Ford, in its turn, could have also acted with greater discretion, especially when it made known that it had thrown its hat into the Centre’s production-linked incentive (PLI) scheme for making electric vehicles in India for the world.
The fact that this announcement was made after the news of its exit from the country naturally created hope within the workforce that there was some light at the end of the tunnel. They were quite right in assuming that Ford would look at Maraimalai Nagar for starting a new journey in electrification. Eventually, this turned out to be a non-starter when the company said it was dropping out of the PLI scheme, thereby burying its EV plans and triggering more disappointment among its employees at the plant.
The other sore point for them is that their counterparts at Sanand are on a better wicket following the acquisition by Tata Motors. Tamil Nadu has constantly reiterated that it was on the lookout for potential buyers, too and names like Hyundai and Ola Electric began doing the rounds. There was also a leadership team from Tata Motors, which had meetings with the Chief Minister, but nothing much materialised finally.
Next Two Weeks Will Be Critical
For now, the next two weeks will be critical in determining the future of the Maraimalai Nagar facility. If the entire workforce accepts the VRS without a hitch, there is nothing to worry about, and Ford will continue to import premium models and strengthen its India infrastructure for spares and service.
On the contrary, if a section of employees refuses to accept the package, this will then turn out to be a long legal process where there will really be no winners by the end of the day. Plant closures are not a pleasant experience, and India has had more than its share over the years, right from PAL-Peugeot and Daewoo to, more recently, General Motors, Harley-Davidson and Ford. Beyond the pain to employees, these have a cascading effect on the backend comprising dealers, vendors and financiers.
GM is another case in point where its Talegaon plant near Pune is still in a state of tremendous uncertainty. Great Wall Motors of China had announced its intent to take over the facility, but then came the pandemic followed by the Chinese army’s aggressive posturing at Ladakh.
Great Wall has now shelved its India plans, and there is no solution for now at Talegaon, even though reports have indicated that companies like Mahindra & Mahindra are exploring the idea of taking it over.
Also read:
Ford Pulling The Plug On Indian Market – Its Impact, Implications
Ford India Winds Up Vehicle Manufacturing India, Plans to Bring Electric SUV and Global Products
Tata Motors E Mobility Acquires Ford India’s Sanand Plant For INR 725 Cr