Staring at the shocked faces of thousands of families who work at the soon closing Ford factory in Maraimalai Nagar, the Tamil Nadu government is offering the same financial assistance to any new investor in the factory asset as it would offer a manufacturing firm setting up a greenfield plant in the state.
What's Happened to Ford?
Per auto industry experts, a perfect storm created by misreading the Indian market/product design/positioning and an unnecessary investment in a second plant when the first was still not at full capacity, resulted in the Ford Motor Company's death in the homeland of Maruti and Mahindra.
In all, losses by Ford's India ops are in the region of US$ 2 billion+. Facing hard times globally, Ford gauged that operations in the future are unviable and it is best to wrap up rather than stay and lose more dollars.
So, What's on Offer?
First up, the guilt tripping Tamil Nadu government
has gone all out to assist Ford to sell the 350 acre plant that can make 200,000 vehicles at max capacity and 340,000 engines a year. (Some engine manufacturing shall continue in India from the Ford Gujarat plant, BTW.)
Second, around 2,000 people who work at the plant will be part of the people-plant package that will be offered to the new buyer. This comes across as a plug-and-play kind of deal, rare to find.
Third, a setup assistance package that could include a VAT subsidy for the first six years of production, special capital subsidy of 15% on plant and machinery, 20% subsidy on power consumption for the first 3 years and a 50% waiver on stamp duty and registration charges.
As garnish, the government will also fast track and assist where needed, all necessary approvals so that the sale goes through smoothly and in time to salvage some of that family feeling.
P:S: As
Ford India is not a major player in any passenger vehicle segment, its absence will not result in any substantial windfall for other manufacturers.
