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Ford exit: MSME suppliers seek Brazil-like compensation from the US carmaker

Turnover to take a hit, should compensate for job losses, say parts makers

Ford India’s auto parts suppliers in the MSME (micro, small and medium enterprises) segment have sought adequate compensation from the US car maker like it offered in Brazil and made a plea to the Tamil Nadu government to extend support for the short term to overcome the losses on account of the closure of factories by the company.

While parts markers that put up dedicated units are worried over the future course of action, most of the other MSME suppliers will see an impact in the range of 15-30 per cent on their revenues, it was pointed out at a meeting chaired by T M Anbarasan, Rural Industries Minister, V Arun Roy, Secretary-MSME and others.

Impact in turnover

“Ford has indicated that it would produce about 30,000 EcoSport till December and if that continued, we would have exhausted raw materials and finished goods by then. About 15-20 per cent of our turnover will be impacted by Ford’s closure,” stated a representative of Alfa Rubber & Springs Ltd, a tier-2 supplier of Ford.

He said the company had made investments and hired staff exclusively to supply for Ford India. “We have to plan how we can use the same for other OEMs. When Ford closed its operations in Brazil, they gave adequate compensation to the suppliers. Hope they will do the same here as well,” the representative said.

Another medium-sized company, which has been supplying connecting rods to Ford India for the past 10 years, said about 1/5th of its production is dedicated to the US carmaker. The ?80 crore company said that it carries huge stock and materials and would have to seek adequate compensation.

Loss in business opportunity

Abhijeet Ranee Polymers, which supplies blow moulding parts, said its parts are special ones and would not be able to explore new business with other OEMs. Its revenue is ?2.2 crore, of which ?1 crore revenue and 180 employees will be impacted due to Ford’s exit from India.

SFS Solutions, which has been supplying fuel and brake parts since 1997, will see about 80 per cent of its turnover (?80 crore) and 200 staff impacted by the closure of Ford India manufacturing. “We will have to make a claim of about ?25 crore to Ford. They should also compensate for job losses. Meanwhile, we are operating on leased land from Ford.

What will happen to us after Ford India’s exit? No responses from Ford on this,” said a representative of the company

State Minister Anbarasan stated that the Chief Minister M K Stalin acted swiftly after the announcement of Ford’s exit from India. “The Chief Minister indicated the state government’s intent to facilitate the sale of Ford’s factory to any interested party. The workers union has also already submitted a plea and the Tamil Nadu government will extend all possible support,” he added