Tata to Buy Ford’s Shuttered Manufacturing Plant in Gujarat

After a decade of accumulating losses from manufacturing vehicles in India—up to as much as US$2 billion in operations—Ford India ceased local production last year and shuttered the two plants, one in Chennai, Tamil Nadu and the other in Sanand, Gujarat.

Now, it has been announced that local automotive giant, Tata, has agreed to take over the Gujarat plant to increase its own manufacturing capacity. Reportedly, Tata will pay Ford 7.26 billion rupees or about US$92 million for the production plant as well as the land, buildings, machinery and equipment; Ford had invested about 80 billion rupees to set up back in 2011.

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Ford will continue to operate its powertrain production line by leasing back the land and buildings where the powertrain unit resides.According to Tata, their manufacturing capacity is “nearing saturation” and the deal is “timely and a win-win” for all parties. The Ford facility, which is conveniently just next to Tata’s existing passenger vehicle manufacturing facility, has a manufacturing capacity of 300,000 vehicles per year and Tata believes they can scale it up to 420,000 units per year.

At the time when Ford announced the closure, it was reported that 4,000 jobs would be affected. As part of the unit transfer agreement (UTA) that was signed between Tata and Ford, all eligible employees at the unit would also be transferred to the Indian automaker; this is welcome news to Ford employees who worked at the plant, hundreds of whom staged a protest when closure plans were announced as they face the loss of their livelihood amidst already challenging times.

Earlier this year, Ford was in talks with the government on potentially converting the facilities for EV production but that plan eventually fell through, which leaves the other production plant still on the shelf for the time being.