Small and medium enterprises (SMEs) will be impacted by Ford India’s decision to close its manufacturing plants in Chennai and Sanand.
Around 4,000 SMEs, including the smaller suppliers are facing a drop in orders as the US giant will stop making vehicles such as the EcoSport, the Figo, the Figo Aspire, the Freestyle and the Endeavour. Over 4,000 SMEs around Chennai and Sanand might face closure, said a convenor of a consortium of small manufacturers.
Ford’s decision to service existing customers will mitigate some of the plight of the component makers. The company said it will maintain a parts depot and continue to offer servicing of vehicles and make engines for the global Ranger pick-up.
“The savings grace here is that components and parts manufacturers will still be making parts for the Ford vehicles on road. But obviously, there will be a drop in orders with no new vehicle manufacturing happening,” said an industry source.
The SMEs mostly supplied auto parts such as the upholstery, leather, dashboards, switches, metres, screens, lights, PVC supplies, cables, fastners, handles, paints and other components either directly or indirectly to the OEM.
Tamil Nadu is the worst hit by Ford’s move as its first manufacturing operation was in Chennai. Moreover, the state is the base for many auto giants because of its port. The whole infrastructure created for vehicle exports and transport logistics will be hit too. Service providers to the Ford factory offices are also facing uncertainty. If 4,000 employees have been directly hit by the move, the indirect job loss is about 12,000.
“The auto sector is going through some really tough times. Our concerns for the sector that contributes about eight per cent to the country’s GDP have been aired a number of times but no one is listening. We did nothing to remove the blocks in policy intervention. Instead we pushed for BS-VI first, reduced the gap between petrol and diesel prices with both nearing Rs 100 per litre, pushed aggressively for EVs, gave PLI to the EV sector and finally vehicle scrappage put the last nail to the coffin,” said K.E. Raghunathan, convenor, Consortium of Indian Associations.
