Ford to spend $2 billion to close plant in India

A man holds a petrol nozzle at a petrol pump in Kolkata, India on July 03, 2021.

Indranil Aditya | Nurphoto | Getty Images

DETROIT – Ford Motor is ending vehicle production in India, closing two of its large plants there and laying off thousands of employees, as CEO Jim Farley restructures the automaker’s operations as part of a turnaround plan. Huh.

The company said Thursday that the action will cost about $2 billion, which includes about $600 million in 2021 and $1.2 billion in pretax special charges in 2022. Of the $2 billion, approximately $300 million will be non-cash charges, which include accelerated depreciation and amortization. company.

Ford has two vehicle and engine plants in the country – Chennai and Sanand – which employ thousands of people. Ford said Sanand Vehicle Assembly will cease production by the end of the year, followed by Chennai by the second quarter of 2022.

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

Engine production for export of the Ranger midsize pickup truck will continue in Sanand, retaining approximately 500 production jobs. Ford said another 100 workers who support parts delivery and customer service will also keep their jobs.

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

Rebecca Cook | Reuters

The automaker said the decision to close the plants was made after India incurred over $2 billion in operating losses over the past decade. It comes as Farley, who became CEO on October 1, executed his Ford+ turnaround plan to better position the automaker for more profitable and expensive electric and autonomous vehicles.

“As part of our Ford+ plan, we are taking difficult but necessary action to deliver sustainable
“Profitable business for the long term and allocates our capital to the right areas to grow and create value,” Farley said in a statement.

India will continue to be Ford’s second largest salaried workforce globally. The company said it plans to expand its 11,000-employee “business solutions” team in India that focuses on engineering, technology and business operations.

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

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

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

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

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