Ford Motor Company heralded mega investments by MNCs in Tamil Nadu.
Among others, the credit for bringing Ford to Chennai should go to the top brass of Ford Motors, Dearborn, USA, Anand Mahindra, then Chief Minister J Jayalalithaa, then US Ambassador Frank Wisner supported by the US Consulate in Chennai and the young IAS officers, Shaktikanta Das and M Raman. Tamil Nadu won the project after race-to- bottom incentive wars among the states including Maharashtra and Haryana.
Ford was already assembling its popular Escort model in collaboration with the Mahindras at Nashik. The Chennai venture initially was a Ford-Mahindra joint effort with the latter having a small share, but could not meet with the large capital requirements and quit.
I remember the glittering function at the Taj Coromandel in January 1996 when senior Ford executives outlined the plan to release the first car within three years in 1998. The company could not offer a compact small car that was much in demand and lost precious time. A more alert team from Korean Hyundai Motors that was watching the function at the Taj from the sidelines, raced with building the Santro model ahead of Ford and made it highly popular.
Far away at Noida near Delhi, another Korean manufacturer, Daewoo Motors, started producing the Matiz which was also an attractive small car. Of course, Maruti with its stable of small cars continued to race ahead in the auto market.
Surviving on exports…
Despite the spate of new models introduced and liberal incentives, Ford could not gain a decent share of the market. The company set up its second manufacturing unit at Sanand, Gujarat, attracted by the promise of the Vibrant Gujarat and on its hope of serving the prosperous northern and western markets better. These expectations did not materialise, and the company was largely sustained by exports.
Ford has opted to set up a new joint venture with the Mahindras. In this, Mahindra has 51 per cent share and Ford 49 per cent. The new venture will take control of Ford India’s operations –its two assembly plants along with the employees. Ford will retain its export business as also its engine plant in Gujarat. The combined capacities of Ford and Mahindra in India are estimated at 12 lakh vehicles.
In 1969, the global giant made a technical and financial joint venture with Escorts Tractors Ltd for manufacturing Ford tractors in India; and in 1971, the first tractor FORD 3000 rolled out of the factory. Later in the decade, the company collaborated with Amalgamations Ltd, Chennai for the assembly of medium trucks. These ventures did not last long.
American companies are not for long haul…
Large American corporations have not been able to cope with the long haul in India. General Motors started operations with a lot of hope, but quit. Amoco that collaborated with Madras Refineries and Madras Fertilizers in the late 1960s, quit within a decade. Chevron Chemicals, involved with fertilizers, lasted longer but left. The reasons may be the more intense competition offered by European and Asian manufacturers, slow growth in their operations, as also perhaps difficulties in tackling the policymakers.
Ford has impacted positively on several vital areas of management like systems, vendor development, quality control, safety and addressed a variety of social concerns- sound ecology, concern for environment, attention to the community around… It has also set up a state-of-the-art research centre.
The $21 billion Mahindra group with established strengths in tractors, automobiles, IT, infrastructure… will have a big opportunity to win a big increase in its share of the auto market with this collaboration.