A man holds a petrol nozzle in a petrol pump in Kolkata, India, 03 July, 2021.
Indranil Aditya | NurPhoto | Getty Images
DETROIT – Ford Motor is ending production in India, shutting down its two large plants there and terminating thousands of employees as CEO Jim Farley restructures the automaker’s operations as part of a turnaround plan.
The company said Thursday that the actions will cost about $2 billion, including pretax special charges of about $600 million in 2021 and $1.2 billion in 2022. About $300 million of the $2 billion will be non-cash charges, including accelerated depreciation and amortization, according to the company.
Ford has two vehicle and engine plants – Chennai and Sanand – in the country that employ thousands of people. Ford said Sanand will wind down production by year’s end, followed by Chennai by the second quarter of 2022.
About 4,000 people will lose their jobs be affected by the plans, according to the company.
Ford Motor Co. CEO Jim Farley walks to speak at a news conference at the Rouge Complex in Dearborn, Michigan, September 17, 2020.
Rebecca Cook | Reuters
The automaker said the decision was made after more than $2 billion in operating losses in India over the last decade. It comes as Farley, who became CEO on Oct. 1, executes his Ford+ turnaround plan to be more profitable and better position the automaker for costly electric and autonomous vehicles.
“As part of our Ford+ plan, we are taking difficult but necessary actions to deliver a sustainably
profitable business longer-term and allocate our capital to grow and create value in the right areas,” Farley said in a statement.
The decision to end production comes after the company abandoned a joint venture earlier this year with Mahindra & Mahindra in India.
Ford is not completely exiting the market. The company said India will remain home to Ford’s second-largest salaried workforce globally. It will continue selling imported vehicles in India and maintain other operations following the restructuring, which the company expects will “create a sustainably profitable business” in the country.
Under Farley’s Ford+ turnaround plan, the company aims to achieve an 8% adjusted profit margin before interest and taxes in 2023. It’s also significantly increasing its spending on electric and autonomous vehicle.
Ford’s decision to end vehicle production in India comes four years after its crosstown rival General Motors exited the market, where Asian automakers dominate.