Fate of GM’s Halol plant hangs in the balance

It is nearly 50 days since General Motors shut down its Halol plant in Gujarat and, to date, there is no indication who the new occupant will be. SAIC Motor Corp of China was tipped to take over from where GM left but the company is still to take a call on the issue.

Clearly, it wants all the labour-related issues at Halol to be resolved first before it commits itself to kicking off operations here. “SAIC will consider this option only if it (Halol) comes to us encumbrance-free,” said a source.

The Chinese automaker, meanwhile, has begun exploring other site options at Maharashtra and Andhra Pradesh as well as a greenfield plant in Gujarat. “SAIC has had discussions with these three State governments but Halol is still a preferred option for the company,” he added.

This makes perfect business sense since the facility has all the infrastructure in place and will translate into savings on time and money.

Commissioning a new plant will take at least 36 months, which means the first car from the SAIC’s table will not roll out before 2020. Halol is clearly the more pragmatic option and it remains to be seen how quickly the Gujarat government paves the way for SAIC’s entry with, hopefully, a share of generous fiscal sops.

In the meantime, GM has started the process of shifting its workforce at Halol to the Talegaon facility in Maharashtra. It also offered employees the option of a financial package under the voluntary separation scheme (VSS) if they did not want to relocate to Talegaon. The transfer of workers from Halol has been happening in batches and the last lot will be off in the coming days.

Yet, there is still a great degree of anxiety among some of them especially when GM announced recently that it would no longer retail cars in India and confine itself to exports from Talegaon.

This has triggered protests from its dealer community who find themselves high and dry without any adequate compensation.

Media reports have suggested that they are contemplating suing the company though it is a moot point if anything will eventually come out of all this.

The workers, equally, will be quite justified in worrying if their jobs will be secure at Talegaon plant even while GM has reiterated that this facility will double up as an exports hub to Latin America. Speculation is rife that a new owner (the name being bandied about is France’s PSA Group) will take over eventually, which means that these workers could just be staring at an uncertain future. Exits in the automobile space have been happening since the time Peugeot (the present PSA Group) shut shop at its plant near Mumbai in end-1997 when it saw no signs of revival likely at its India car business. Daewoo followed suit five years later when its parent company collapsed and operations at its Surajpur facility near Delhi came to a standstill.

In the case of GM, the only silver lining in the cloud is that its Halol plant could at least get another occupant in the form of SAIC even while there is no certainty on this yet. The Gujarat government will go the extra mile in convincing the Chinese automaker since it has been proclaiming itself as the new auto hub since the time Tata Motors relocated the Nano plant here from West Bengal.

Other big brands such as Maruti Suzuki, Ford and Honda are also making a beeline for Gujarat and, in this backdrop, getting SAIC into Halol is the best way forward for the State government to send a message that all is well.

COMMENT NOW