3 yrs after exiting India, Ford to revive Chennai manufacturing plant. How Stalin govt wooed US carmaker

New Delhi: Three years after exiting India, American automobile major Ford Motors is poised to restart manufacturing in Tamil Nadu for exporting vehicles to oversea markets.

Ford will be focusing on manufacturing electric vehicles (EVs) and will also be exploring other joint ventures, according to sources in the Tamil Nadu government. The decision comes just as Chief Minister Stalin is wrapping up his two-week trip to the US.

The carmaker submitted a Letter of Intent to the Tamil Nadu government on 13 September. Ford’s return to Tamil Nadu is the culmination of a year of negotiations by both Stalin and Minister for Industries T.R.B. Rajaa, according to government sources.

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“Ford is back,” Rajaa posted Friday on social media platform ‘X’, writing that Stalin’s efforts to showcase Tamil Nadu’s manufacturing prowess and reposition the state as an industrial powerhouse has yielded “rich dividends.”

https://x.com/TRBRajaa/status/1834507642284499002

“This step underscores our ongoing commitment to India as we intend to leverage the manufacturing expertise available in Tamil Nadu to serve new global markets,” wrote Kay Hart, President of Ford’s International Markets Group, on LinkedIn.

India is the world’s third-largest car market. Ford exited India in 2021 by stopping production of cars for domestic sale, and also stopped exports in 2022. The erstwhile Ford facility in Maraimalai Nagar in southern Chennai, where Ford built cars and engines, has remained inoperational.

Though the American carmaker had exited from the Indian automobile market, the Ford Business Solution team in Chennai employs 12,000 people. Ford Business Solutions provide technology and business services that aid Ford’s businesses worldwide.

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How the deal was pulled off

Rajaa initiated talks with the American company in July 2023 on a visit to San Francisco over potential ways to use the Ford facility in Chennai. Ford then requested six months to evaluate the situation.

The state government kept following up with Ford, and the conversation continued in October and November 2023, when the Tamil Nadu industries department and the carmaker held several rounds of discussions on the future of the facility. In July, Rajaa visited Ford’s main factory in Dearborn, Michigan, near Detroit, where the big three auto manufacturers—Ford, General Motors, and Chrysler—are headquartered.

Rajaa has been consistently advocating for Ford to resume operations at its facility, according to government sources. In the July visit, he reportedly highlighted Tamil Nadu’s automobile manufacturing sector and its recent emphasis on electric vehicles (EVs).

Vinfast and Tata JLR also recently set up EV plants in Tamil Nadu. Another talking point was the significant progress the state has made since 2021 to attract foreign investment and improve the ease of doing business.

In his US trip, Stalin appears to have reassured Ford that his government would fully support a smooth reintegration into the automotive sector.

Had a very engaging discussion with the team from @Ford Motors! Explored the feasibility of renewing Ford’s three decade partnership with Tamil Nadu, to again make in Tamil Nadu for the world!@TRBRajaa @Guidance_TN @TNIndMin #InvestInTN #ThriveInTN #LeadWithTN #DravidianModel pic.twitter.com/J2SbFUs8vv

— M.K.Stalin (@mkstalin) September 11, 2024

“The decision follows multiple meetings with the Tamil Nadu government, including one I had last week with the Chief Minister of Tamil Nadu as part of his visit to the United States. We appreciate their ongoing support as we have explored different options for the plant,” wrote Hart on LinkedIn.

The Ford Business Solution team plans to add between 2,500 and 3,000 employees in the next few years, in addition to the 12,000 it currently employs.

“When you add that with our engine manufacturing team in Sanand and our ongoing customer and dealer support team, India is Ford’s second-largest employee base worldwide,” wrote Hart.

Big wins for Tamil Nadu

Stalin’s visit to the US, which began 27 August, was solely focused on attracting high-value investments to Tamil Nadu.

In the last two weeks, Stalin, Rajaa, and Guidance—Tamil Nadu’s nodal agency for investment promotion—have been able to secure big names in technology, AI, electronics manufacturing, industrial automation, and semiconductors.

The chief minister has been regularly updating audiences about the MoUs signed during the trip and is expected to announce the total amount of investment he’s secured when he returns to Chennai. Sources in the Tamil Nadu government suggest that it may be upwards Rs 7,000 crore.

The Tamil Nadu government’s efforts to bring industry names have brought some results in one of the highly industrialised states in India. Major tech players like Google, PayPal, and Amazon have announced projects and investments over the last few weeks. Google will be setting up Tamil Nadu AI Labs and aims to skill 2 million people in AI through its “Naan Mudhalvan program,” which will collaborate with local startups and MSMEs.

Google will also be collaborating with IIT Madras’s Wadhwani School of Data Science and AI. Amazon Web Services is launching a generative AI startup hub programme, and PayPal is launching an AI and machine learning development center in Chennai which aims to generate 1,000 jobs.

Applied Materials will also be setting up an AI-enabled technology development center for semiconductor manufacturing, which will create around 500 jobs.

Some of the other key investments include Rs 2,000 crore from electronics manufacturing service Jabil in Tiruchirapalli, which will create a new cluster for electronics manufacturing and create 5,000 jobs.

(Edited by Tony Rai)

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