Ford will spend $ 2 billion to plant in India

A man holds a gas canister at a gas station in Calcutta, India, on July 3, 2021.

Indranil Aditya | NurPhoto | Getty Images

DETROIT – Ford Motor ends vehicle production in India, shuts down its two large plants here and terminates thousands of employees, as CEO Jim Farley restructures car operations as part of a turnaround plan.

The company said Thursday that the shares will cost about $ 2 billion, including pretax expenses of about $ 600 million in 2021 and $ 1.2 billion in 2022. About $ 300 million of the $ 2 billion will be non-cash expenses, including accelerated depreciation and amortization, according to the company.

Ford has two vehicle and motorcycle factories – Chennai and Sanand – in the country that employ thousands of people. Ford said the Sanand vehicle assembly will drop production by the end of the year, followed by Chennai from the second quarter of 2022.

About 4,000 people will lose their jobs because of the plans, according to the company. Ford has said it will maintain a small production footprint in India, with plans to expand its large employee base of more than 11,000 people in the country.

Production of engines for the export of the medium-sized Ranger pickup will continue in Sanand, retaining about 500 production jobs. Ford said another 100 employees who support parts distribution and customer service also retain their jobs.

Jim Farley, CEO of Ford Motor Co., walks in to speak at a press conference at the Rouge Complex in Dearborn, Michigan, on September 17, 2020.

Rebecca Cook | Reuters

The automaker said the decision to close the plant was taken after more than $ 2 billion in operating losses in India over the past decade. It comes as Farley, who became CEO on Oct. 1, executes his Ford + shift plan to be more profitable and better position the carmaker for expensive electric and autonomous vehicles.

“As part of our Ford + plan, we are taking difficult but necessary actions to provide sustainability
a long-term profitable business and allocates our capital to grow and create value in the right areas, ”Farley said in a statement.

India will become Ford’s second largest salaried workforce in the world. The company said it plans to expand a team of 11,000 employees in “Business Solutions” in India that is focused on engineering, technology and business operations.

Ford will continue to sell imported vehicles to India and maintain other operations after the restructuring, which the company expects will “create a sustainably profitable business” in the country.

Under Farley’s Ford + turnaround plan, the company aims to achieve an adjusted profit margin of 8% before interest and taxes in 2023. It will also significantly increase its spending on electric vehicles. and autonomous.

Ford’s decision to end vehicle production in India comes four years after its crosstown rival General Motors left the market, where Asian manufacturers dominate.

Ford left a joint venture earlier this year with Mahindra & Mahindra in India.

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