Ford to Expand India Operations

Will build a new small car within next two years

Ford Motor Co. announced plans on Jan. 8 to invest $500 million to expand its India operations. The new investment will fund several new initiatives, including the expansion of it current manufacturing facility in Chennai to begin production of a new small car within the next two years and construction of a fully integrated and flexible engine manufacturing plant that will go online by 2010. The new investment increases Ford's total financial commitment in India to more than $875 million.

"This new investment highlights the significance of India's role in our continued expansion and overall strategy for the Asia Pacific and Africa region. We've developed a long-term and strategic plan for India that's anchored on a substantial product program and new engine manufacturing facility," said John Parker, executive vice president, Asia Pacific and Africa.

The first phase of the investment includes the addition of a diesel engine assembly plant at the Chennai site that will have an initial annual capacity of 50,000 units. The first engines are scheduled to roll off the line in April, and will be used in the local production of the Fiesta and Fusion to satisfy domestic demand.

Ford says a significant part of the investment will be utilized for the development of new product programs, primarily to expand the Chennai plant and accommodate volume production of the new small car. Production of the small car is scheduled to begin within the next two years, increasing annual production at the expanded plant to 200,000 units by 2010.

"Ford India's small car will be a worthy addition to the already successful and robust product mix that we offer to Indian consumers and will further strengthen our competitive position in this increasingly dynamic market," explained Arvind Mathew, president and managing director of Ford India.

The second major component of the investment plan is a new flexible facility that will be capable of manufacturing both petrol engines and Ford's next generation diesel engine. Initial annual production capacity is planned for 250,000 units, with the first engines coming off line by 2010.

The new facilities and capacity expansion will create more than 9,000 jobs -- including 1,500 direct and 7,500 indirect jobs. "We'll be significantly increasing our local sourcing to meet the requirements of our expanded production. One of the factors in deciding this investment was Ford's confidence in the international standards and capabilities of India's supply base," said Mathew.

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