Tamil Nadu

Workers take a hit as Ford slams on the brakes

Up in arms: Ford Motor workers and CITU members staging a protest in front of the factory at Maraimalai Nagar against the company’s announcement that it would cease manufacturing at the Chennai plant.   | Photo Credit: VELANKANNI RAJ B

Shanmugham M., 36, joined the Ford Motor plant at Maraimalai Nagar in 2004, immediately after completing his diploma at an industrial training institute. In the past 17 years, he has come on time to work, rarely taken leave and met all work parameters set by the company. His salary has risen to ₹60,000 from a few thousands a month.

He was the first person from his village then to join a multi-national company. But he is shattered and worried about his future following Ford’s announcement that it would cease manufacturing at the Chennai plant by the second half of 2022. “My parents are old and have health issues. Two years ago, I took a housing loan and got a place near the plant. I have two kids who are at junior school — the thought of not having this job is painful,” he cries. He says that since this news broke, many workers have been seeking jobs at nearby factories and other units, but there is a freeze on hiring at most places owing to the COVID-19 pandemic. Like Shanmugham, there are 2,600 workers at this plant who have different stories to narrate.

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Some workers are yet to come to terms with the news. They still hope Ford will change its decision. A majority of the workers aged in the 30s and 40s have been on the company’s payroll for more than a decade.

S. Mariappan says he has been at the plant since 2000 and he had never expected the factory to close down. “They have been telling us that sales have not been good — but we never thought it would lead to the closure of the plant.” He has worked on the iconic models such as Ford Ikon, Ford Fiesta Classic, Ford Figo and Ford EcoSport. The very thought that he would no longer work at Ford is scary for him.

Bad news

On September 9, when Ford workers were on leave and preparing for Ganesh Chaturthi, they got a message — “Ford India will cease manufacturing vehicles for sale in India immediately; manufacturing of vehicles for export will wind down at Sanand vehicle assembly plant by Q4 2021, and Chennai engine and vehicle assembly plants by Q2 2022.”

A statement from Ford Motor Company quoted its president and CEO Jim Farley as saying, “Despite investing significantly in India, Ford has accumulated more than $2 billion in operating losses over the past 10 years, and the demand for new vehicles has been much weaker than the forecast.”

Anurag Mehrotra, president and managing director of Ford India, added: “Ford has a long and proud history in India. We are committed to taking care of our customers and working closely with employees, unions, dealers and suppliers to care for those affected by the restructuring.”

The workers who returned to duty held two rounds of talks with the plant heads and the human resource team. The talks failed. “The company has clearly told our union members that they are stopping manufacturing,” one of the workers said.

P. Senthil Kumar, general secretary of the Chennai Ford Employees Union (CFEU), who attended the meetings, said the union had asked the company for a job guarantee, but the management rejected the demand. Sources at the plant said a section of the workers had requested a virtual meeting with the senior management in the United States and the APAC region in the coming week. The union members are reaching out to the State government for help.

Analysts and experts who track the automobile industry in Tamil Nadu say this is the first biggest industrial issue that the DMK has to face after coming to power. “But this is happening because the carmaker failed in business and not because of the State government,” one analyst clarifies.

What went wrong?

Ashim Sharma, Partner & Group Head Business Performance Improvement Consulting at Nomura Research Institute, explains that Ford did have an early start in India and launched some successful products like EcoSport and Ikon. However, the lack of an elaborate portfolio covering all key segments and a longer time for refreshing the existing models led to declining sales. He points out that the other issue was the capacity which was created partly in anticipation of a higher growth of the Indian car market as well as exports (making India a hub for small car export) did not play out as expected. “In addition, this can also be seen in the light of there being a need to fund the electric vehicle vision of the company which would have limited the flow of funds for a loss-making entity,” he reasons. Lastly, the company might have run out of time to salvage its Indian operations because of its inability to find a local partner.

Supplier troubles

Supplier units, including several micro, small and medium enterprises in Tier 2 and 3 cities in Tamil Nadu, logistics-providers and dealers will also be adversely affected. “Due to the multiplier effect of the automotive industry, with each vehicle produced leading not just to primary but also secondary and tertiary employment, the shutting down of car plants is always a big blow in economic terms,” Mr. Sharma says.

There are around 9 dealerships in the State which employ around 1,000 direct employees who will be affected, and there is no count of indirect job losses due to the dealership closure. Data provided by the Federation of Automobile Dealers Associations (FADA) show there may be around 100 vehicles with dealers in the State which will cost anywhere around ₹15 crore.

FADA president Vinkesh Gulati says the dealer community is trying to navigate its way out of the crisis caused by the pandemic; in these challenging circumstances, Ford’s exit has left them in a bind. “In India, dealers are already operating on very low margins, and any exit will not only hurt the dealers financially but will also undermine the customer’s trust in the global brands and the dealer.”

According to the FADA, dealers invest ₹5 crore-₹6 crore in setting up Ford dealerships in India. One of Ford’s dealers in Tamil Nadu says, “After the pandemic, I was looking forward to the upcoming festival season; with this announcement, it is bleaker than before. My consignments will get stuck.”

Micro, small and medium enterprises that have been supplying to Ford since the late 1990s and early 2000 are calculating their possible losses. The head of one such unit says, “Around 70% of my components are for Ford, and I have a separate team that focuses on making them.”

A few units at the Thirumudivakkam Industrial Estate said their businesses would also bleed. The Hindu spoke to seven units and five of them said they would lose anywhere between ₹1 crore and ₹6 crore a year owing to Ford’s exit. The other two units said their business with Ford amounted to a few lakh rupees, and they had started focussing on other companies.

After Ford’s announcement, employees at the Ford Suppliers Park were concerned about what would happen to their jobs.

“Nothing has been communicated to us. But we are worried about our jobs,” said an employee working at one of the units in this park located on the campus of Ford India.

Meanwhile, micro, small and medium enterprises that supply to Ford have been called to a meeting with the Industries Commissioner and the Director of Industries and Commerce on Monday. “We have been called to the SIDCO office for a meeting,” a unit owner said.

Way forward

With the sword of Damocles hanging over their head, workers at the Ford plant want a new job and a good separation package until June 2022. “One thing good about Ford is that they have trained us well. Every time there is a new trend in the automobile sector, they update us and ensure that we learn it. This means, we can be hired by any auto firm,” an employee pointed out. “We request the Chief Minister to intervene and help us with jobs based on our qualification and service.”

Another section of Ford workers whom The Hindu spoke to while they were wrapping up their work and leaving home said the Tamil Nadu government had signed several memoranda of understanding in the last few months and laid the foundation for many industrial units that will start operations in the coming months. The Chief Minister should try and accommodate the Ford workers at these companies.

When contacted, Ford’s spokesperson said, “We have started our discussion with the union and will keep you updated and informed as we progress on all important matters. We will work closely with unions to arrive at a fair and balanced separation package for represented employees who will leave our business.” Asked how much the separation package would be, the spokesperson did not give any answer.

So far, Ford has invested $1 billion in its vehicle operations in Chennai. The spokesperson also said the company would maintain full customer support operations with service, after-market parts and warranty support. “We will work with our current dealer network to transition the majority of them from sales and service to the services and parts businesses, so that we can continue serving our customers.”

Earlier this week, Chief Minister M.K. Stalin held a brief discussion with Industries Minister Thangam Thennarasu on Ford’s announcement, but the government has not spelt out its views so far.

(The names of employees have been changed to protect their identity.)

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Printable version | Oct 27, 2021 10:37:07 AM | https://www.thehindu.com/news/national/tamil-nadu/workers-take-a-hit-as-ford-slams-on-the-brakes/article36544549.ece

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