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Ford Motor To Cease Operations In India: What Happens Next?

Ford Motor To Cease Operations in India: What Happens Next?

“To continue investing … we needed to show a path for a reasonable return on investment,” Ford India head Anurag Mehrotra told reporters last week. “Unfortunately, we are not able to do that,” Anurag concludes. 


Ford India Private Limited announced on 9 September 2021, their intent to shut down their two manufacturing plants located in Chennai, Tamil Nadu, and Sanand, Gujarat. Their decision to move out of the Indian market comes with a heavy heart. After sinking $2.5 billion in India since entry and burning another $2 billion over the past decade alone, Ford decided not to invest more. 

Ford Motors’ venture into India was not easy, especially being one of the first multinational automobile companies entering into the Indian market and their journey was neither smooth with tough competition from companies such as Japan’s Suzuki Motor Corp. and South Korea’s Hyundai Motor Co. Surprisingly, they were not the only global automobile corporations that have found it difficult to sustain India’s automobile market which is the fourth largest in the world based upon production statistics of 2017. In fact, Ford’s American rival General Motors (GM) and the American motorcycle company Harley-Davidson are also on the list of global companies that have ceased manufacturing in India.

Factors Contributing To Ford India’s Closure

Some of the key factors were:

  • Failure to adapt to the Indian Consumers’ Portfolio

Indian consumers prefer small, cheap, fuel-efficient cars that could bump over uneven roads without needing expensive repairs. In India, 95% of cars are priced below $20,000.”The struggle for many global brands has always been meeting India’s price point because they brought global products that were developed for mature markets at a high-cost structure,” commented analyst Ammar Master at LMC Automotive. 

An automobile industry expert from India who prefers annonymity,  pointed out that Ford did not fully customize its car platforms. India is a right-hand drive market whereas in the US it is left-hand drive.  The expert adds, “Some of the Ford India’s car models, the owner-driver, had to get down, go around the vehicle, open the left side door to unlock the boot, certainly a tedious affair,” the expert explained. 

  • Difficult Market for Global Brands

Some of Ford’s missteps can be traced to when it drove into India in the mid-1990s. While Maruti Suzuki India Ltd and Hyundai Motor India Ltd cashed in on launching new models at different price points, Ford and General Motors failed to do so as they didn’t have a small car in their global portfolio. Ford mentioned that it had considered bringing more models to India but determined it could not do so profitably. 

In addition, an automobile industry expert from India pointed out that Ford did not fully customize its car platforms. India is a right-hand drive market whereas in the US it is a left-hand drive. As such, “Some of the Ford India’s car models, the owner-driver, had to get down, go around the vehicle, open the left side door to unlock the boot, certainly a tedious affair,” the expert explained. 

Hence, as a whole, “U.S. manufacturers with large truck DNAs struggled to create a good and profitable small vehicle. Nobody got the product quite right and losses piled up,” said Ravi Bhati, President of JATO Dynamics Ltd.

While India’s auto market has been described as tough to crack, Hyundai subsidiary Kia Motors and China’s MG Motor are among the exceptions, having made significant inroads over the last couple of years.

  • Demand Has Been Muted

Auto sales have registered a combined annual growth rate of just 1.5 per cent in India over the past five years, upsetting the plans of MNCs who have heavily invested in the Indian markets. In conjunction with the Indian market’s downturn, the automobile industry demand for combustion vehicles, in general, is declining due to the transition towards an all-electric future. 

“The industry has been witnessing comparatively slower growth in the last 18 months… There have been a lot of statements about the importance of the automobile industry, but in terms of concrete action, which would reverse the decline, I haven’t seen any action on the ground. I don’t think the car industry would revive either with ICEs, or with the CNG, biofuels or EVs unless we address the question of affordability of cars for the consumers,” Maruti Suzuki chairman R C Bhargava had said.

Therefore, a combination of factors snowballed over 25 years with the pandemic last year, exacerbating the economic losses to a point of no return.

Ford considered several options in India, including partnerships, platform sharing and contract manufacturing with other carmakers before deciding to shut down factories in India.

What Is Next?

  1. For Ford India Employees

“The company has to export about 30,000 cars by the end of this year. So, the management has cajoled the workers to restart production while holding talks relating to the plant closure,” another worker told IANS preferring anonymity.

According to Ford India, about 4,000 employees are expected to be affected by its decision. The union officials are also studying the settlement packages offered by other companies and to avoid other pitfalls so that they can secure a good compensation package if they are not able to protect their jobs.

       2.  For India and automobile industry competitors

The retreat by Ford is a further blow to Prime Minister Narendra Modi’s Make-in-India program, which encourages companies to manufacture locally. Tesla Inc. has urged Modi’s administration to allow it to import cars more cheaply before it commits to setting up a factory in the country.

According to Vahishta Unwalla, Lead Analyst-Industry Research Team, Care Ratings Ltd, companies in the utility vehicle space like Maruti Suzuki, Hyundai Motor, Kia Motors India Pvt Ltd and Tata Motors Ltd shall benefit by the exit of Ford India. She adds that since Ford India is not a major player in any car segment,  its absence will not result in any substantial windfall for other players.

More updates on Ford can be found https://corporate.ford.com/

References of Content:

[1] What the exit of Ford Motor Company from India tells us by MG Arun, India Today
[2]
Ford Motor Company bails on India, will shut car factories there    by Ragini Saxena and Keith Naughton (Bloomberg)
[3] Ford motor to cease local production in india shut down both plants report by Pranav Mukul
[4] What went wrong with Ford in India and who will benefit from its exit? by IANS, Chennai


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Intech Additive Solutions, Metal AM Pioneer In India, Bags Multiple Orders Worth USD 2M

Intech Additive Solutions, Metal AM pioneer In India, Bags Multiple Orders Worth USD 2M

Intech Additive Solutions Pvt Ltd.(Intech), the first Indian OEM successful in developing and supplying 3D metal printers based on laser powder bed fusion technology (LPBF) for industrial manufacturing, has bagged multiple orders in the last quarter of the FY ending 31st March,21 worth USD 2M  for its ‘Made in India’ Metal AM systems.

Intech, India’s first and only Metal Additive Manufacturer having its facility in Bengaluru,  has created history in the Metal AM industry by becoming the first Indian OEM to indigenously develop, manufacture, and sell its iFusion series of Metal AM systems, along with its Build Processing software AMBuilder and parameter optimisation software AMOptoMet – both developed in-house. These integrated systems have gained ready acceptance in the industry against stiff competition from global majors.

Intech’s multiple orders worth USD 2M  includes the sale of a combined total of six metal AM Systems, iFusion SF1, and iFusion LF1, configured with Pre-build software AMBuilder to five organisations, viz. Indo-MIM, a leading global supplier of Metal Injection Molding components catering to Aerospace, Medical, and Oil & Gas industries, Pandit Deendayal Energy University (PDEU) – for applications in Energy and Energy infrastructure, Poeir Jets- an Indian OEM for Heavy-lift Drones and two more renowned organisations in India whose names will be announced soon.

“We have focused on a steady and sustainable growth path despite the challenges of COVID and enforced lockdowns. It is exciting to see that our home grown iFusion series Metal AM systems, AM software suite AMBuilder and AMOptoMet has been well accepted and garnering increasing acclaim day by day as a better alternative to extremely expensive imported AM systems” said Sridhar Balaram, CEO of Intech Additive Solutions. “Our target industry segments are growing, and our investment strategy has kept up with the increased demand with the support of our strong team of experts in-house. We are also diversifying our team by adding innovative young professionals”

“The positive results of Q4′ 20-21 has prompted us to accelerate our investment plans in hardware, software, and consultancy. Our sales pipeline is highly promising. The market is prompting us to take a positive stand despite the looming COVID situation, which also gives us immense confidence to invest further.” said Pradeep Nair, Vice President -Hardware Sales, Intech.”We are confident and determined to establish Intech as a global OEM. Our primary task is to create an innovative ecosystem to produce metal AM products and services and embed them into mainstream manufacturing”

“Intech aspires to stay true to the principles of ‘Make in India’ and the ‘Atmanirbhar Bharat Abhiyan,’ advocating self-reliance through India’s additive manufacturing industry’s technological transformation. It also aims to be a global solution provider for Metal AM Systems and AM Software, contributing to the growth of a sustainable ecosystem for AM systems in India to compete globally and ensure AM manufactured end-user functional components for domestic and export markets.” added Sridhar Balaram.

Intech is amongst a few manufacturers globally to integrate its metal printers with its build processing software – AMBuilder and an additional software tool AMOptoMet for parameter optimisation. Combining the two software packages with Intech’s printers provides users with an end-to-end metal AM solution along with local after-sales services.

 

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Dormer Pramet Strengthens Asia Capabilities With Acquisition Of Miranda Tools

Dormer Pramet Strengthens Asia Capabilities With Acquisition Of Miranda Tools

Dormer Pramet has agreed to acquire the business of India-based Miranda Tools, a manufacturer of High-Speed Steel (HSS) and solid carbide cutting tools.

The acquisition enhances Dormer Pramet’s production capabilities with a proven manufacturing platform and further strengthens the company’s round tools offer for the general engineering, automotive component manufacturing and MRO industries.

“I am very pleased to have reached an agreement to acquire the business of Miranda Tools and look forward to welcoming them into the Dormer Pramet family. We see a lot of commonalities between the two companies, with an established distribution network, long-standing customer partnerships, and a focus on product quality and service,” said Stefan Steenstrup, president of Dormer Pramet.

“It also strengthens our position in the Indian and wider Asian markets, supporting a vast array of small to medium-sized workshops, which rely heavily on HSS cutting tools. By expanding our manufacturing footprint to encompass North and South America, Europe and now Asia, we can better serve these markets.”

“At present, we see this as business as usual for Miranda Tools and I would like to reassure customers that the proposed acquisition will not impact on their ability to receive the products they need in the day-to-day running of their business,” he concluded.

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2019 Gartner CIO Agenda Survey Reveals That India Is Entering Third IT Era

2019 Gartner CIO Agenda Survey Reveals That India Is Entering Third IT Era

Digital business is maturing from tentative experiments to large-scale implementation across the economy. CIOs must evolve their thinking to be in tune with a new era of rapid increases at the scale of digital business and Gartner’s annual global survey of CIOs has revealed that the CIO role will remain critical to digital transformation.

The 2019 Gartner CIO Agenda survey gathered data from more than 3,000 CIO respondents in 89 countries and all major industries, representing approximately $15 trillion in revenue/public-sector budget and $284 billion in IT spending. And according to the survey, digital business reached a tipping point this year with 46 percent of Indian CIOs reporting that their organisations have changed their business models or are in the process of changing them.

“What we see here is a milestone in the transition to the third era of IT, the digital era,” said Andy Rowsell-Jones, vice president and distinguished analyst at Gartner. “Initially, CIOs were making a leap from IT-as-a-craft to IT-as-an-industrial-concern. Today, 20 years after we launched the first CIO Agenda survey, digital initiatives, along with growth, are the top priorities for CIOs in 2019. Digital has become mainstream.”

India’s IT Budget Growth Slows Down, But Remains Above the Global Average

The transformation toward digital business is supported by steady IT budget growth. Globally, CIOs expect their IT budgets to grow by 2.9 percent in 2019. This is only slightly less than the 2018 average growth rate of 3 percent. A look at the regional differences shows that the regions are moving closer together, but India still has the lead. Indian IT budgets are expected to grow by 3.9 percent in 2019, which is less than the 7.4 percent growth rate of the previous year. This slowing can be attributed to the larger macroeconomic situation concerning slow economic growth, corporate earnings and market volatility. Overall, Asia/Pacific shows an expected growth of 3.5 percent.

“Indian CIOs should use their financial resources to make 2019 a transformative year for their businesses. Stay active in the transformation discussions and invest time, money and human resources to remove any barriers to change. Organisations that fall behind in digital business now will have to deal with a serious competitive disadvantage in the future,” said Mr. Rowsell-Jones.

Disruptive Technologies Are Breaking Through

Disruptive emerging technologies will play a major role in reshaping business models as they change the economics of all organisations. Gartner asked CIOs and IT leaders which technologies they expect to be game-changers. Among Indian respondents, data and analytics was the most mentioned technology (32 percent), while artificial intelligence (AI) ranked second (30 percent).

With regards to implementation, when asked about their organisation’s plans in terms of following digital technologies and trends, we see an impressive 270 percent increase in AI adoption since 2015 in India. During the same time frame, 3D printing adoption increased by 100 percent and conversational interfaces deployment by 48 percent.

“On the surface this looks revolutionary. However, this bump in adoption may indicate irrational exuberance instead,” said Mr. Rowsell-Jones. “While CIOs can’t afford to ignore this class of technologies, they should retain a sense of proportion. For example, the latest batch of AI tools is yet to go through its Trough of Disillusionment.”

Cybersecurity Becomes an All-Company Issue

According to the survey, 94 percent of Indian CIOs expect cybersecurity threats to worsen. It is therefore necessary to create a secure base for digital business that shields both organisation and clients. The survey indicates that 62 percent of Indian CIOs said cybersecurity is their responsibility. However, on its own, the IT organisation can no longer provide cybersecurity.

The rise of social engineering attacks, such as phishing, requires a broader behavioural change from all employees. However, in only 9 percent of Indian organisations is the board of directors accountable for cybersecurity, rather than the CIO alone. Nevertheless, to improve security against cyberthreats, in all organisations, CIOs are combining measures to harden information-processing assets with efforts to influence the people that use technology.

“Last year, I said that CIOs must start scaling their digital business, and they excelled,” said Mr. Rowsell-Jones. “This year, they have to take it one step further and put their growing digital business on a stable and secure base. Success in the third era of enterprise IT hinges on a sound strategy that combines new, disruptive technologies with a rebalancing of existing investments.”

Gartner clients can learn more in the report “2019 CIO Agenda: Securing a New Foundation for Digital Business.”

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Metal Forming Sector Positive In India

Metal Forming Sector Positive In India

India: The Indian Machine Tool Manufacturers’ Association’s (IMTMA) president P Ramadas said that the country’s machine tool industry is expected to grow around 20 per cent in 2017-18, and the metal forming industry is expected to grow at a compound annual growth rate of around 15 per cent in the next three years.

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