Ford to spend $ 2 billion to shut down plant in India

Ford to spend $ 2 billion to shut down plant in India

A man holds a gasoline nozzle at a gas pump in Kolkata, India on July 3, 2021.

Indranil Aditya | Nurphoto | Getty Images

DETROIT – Ford Motor is shutting down production in India, shutting down two of its large factories there and laying off thousands of employees as CEO Jim Farley restructures the automaker’s operations as part of a turnaround plan. East.

The company said Thursday that the stock would cost around $ 2 billion, including around $ 600 million in 2021 and $ 1.2 billion in pre-tax special charges in 2022. Of the $ 2 billion, about $ 300 million dollars will be non-cash charges, which include accelerated depreciation and amortization. for the company.

Ford has two vehicle and engine factories in the country – Chennai and Sanand – which employ thousands of people. Ford has 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, around 4,000 people will lose their jobs because of the plans.

Ford Motor Company CEO Jim Farley speaks during a press conference at Rouge Complex on September 17, 2020 in Dearborn, Michigan.

Rebecca Cook | Reuters

The automaker said the decision to shut the factories was taken after India suffered operating losses of more than $ 2 billion 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 steps to deliver
“A profitable business over the long term and allocating 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 in the world. The company said it plans to expand its 11,000-employee “enterprise solutions” team in India, which 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 says will “build a sustainable profitable business” in the country.

As part of Farley’s Ford + turnaround plan, the company aims to achieve an adjusted profit margin of 8% 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 crosstown rival General Motors left the market dominated by Asian automakers.

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

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