Sanand, literally meaning “with pleasure”, never had it so good: after Tata Motors’ Nano plant, it can now boast being home to Ford cars as the American multinational today said it will invest Rs 4,000 crore (about $1 billion) in this town, 30 km from Ahmedabad, to set up an integrated manufacturing facility.

With this, the total investments made by Ford Motor in India since its Chennai foray in 1995 would double to $2 billion.

Tata Motors and its vendor park had been allotted 1,100 acres at Sanand in 2008 where the company invested Rs 2,000 crore for its car-making plant, shifted from Singur (West Bengal). The new plant, Ford’s second in India after Chennai, will be established over 460 acres in Sanand.

Ford India will set up two facilities to assemble, initially, 2.40 lakh units of cars and 2.70 lakh engines annually. Construction of both the plants will begin later this year and the first vehicle and engine will come off the line in 2014.

However, the company refused to divulge details of the package with the Gujarat Government with which it signed an MoU, or “state support agreement” in Gandhinagar before the announcement.

“The Gujarat Government has a transparent policy of offering incentives and packages for such projects and we have adhered to this policy”, said Ford officials in reply to repeated queries about the price of land the company would be paying to the State Government.

After Tata Motors’ arrival in Sanand, land prices at many places in Gujarat have skyrocketed.

The MoU was signed by Mr Maheshwar Sahu, Principal Secretary (Industries), and Mr Michael Boneham, Ford India’s President and Managing Director, in the presence of the Chief Minister, Mr Narendra Modi, and Mr Joe Hinrichs, President, Ford Asia-Pacific and Africa.

The facilities would include stamping, body paint and assembly operations for vehicle manufacturing as well as machining and assembly operations for engine manufacturing. The new investments would create 5,000 jobs, Mr Hinrichs and Mr Boneham, told reporters.

The State Government has also prioritised land adjacent to the site for supplier operations. It will be protected by the local government in order to attract and locate automotive suppliers in close proximity to both the plants.

While declining to name the States that Ford India scouted for its second plant in India, Mr Hinrichs said the company selected Gujarat because of its pro-business environment, infrastructure, access to ports in north-western India and skilled workforce. “Most States offered us the same level of packages.” The new facilities will allow quick access from operations at Sanand to the heartland of north and western India where the largest share of the country’s passenger car industry exists. As regards potential exports, they said the company would discuss with the ports rather than having its own jetty.

The Chennai and Sanand plants, Mr Hinrichs said, would make Ford India reach the goal of increasing global sales by nearly 50 per cent to about eight million a year by 2015, by when the company would be bringing more than 50 new vehicles and powertrains to Asian and African regions.

“Sixty to seventy per cent of Ford’s growth is expected to come from this region.”

Ford had recently announced an investment of $72 million by 2012 to expand its powertrain facility in Chennai to further support its expansion India. It currently has sales and service network of 190 outlets across 108 cities, of which 40 per cent are located in the secondary markets. This year, Ford India would open one outlet every week. India would be the third largest auto market in the world by 2020, they added.

Ford Motor is constructing two assembly and engine plants in China as well, Mr Hinrichs said, adding that the company had, in the last two years, invested $4 billion in the Asia-Pacific region.

At present, Ford India makes the hatchback Figo, Fiesta sedan and Endeavour SUV at the Maraimalai Nagar plant near Chennai, which has been in operation for over a decade. The vehicle plant can make over one lakh cars a year and the engine plant is being expanded. In 2010, Ford had announced it would bring eight new vehicles to India by mid-decade.

(This article was published on July 28, 2011)
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