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Old 1st September 2011, 12:15   #76
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Default Re: Chennai : A New Detroit Rises In India (WSJ)

Tamil Nadu no longer favoured auto hub

Tamil Nadu no longer favoured auto hub
T E Narasimhan / Chennai September 1, 2011, 0:25 IST

Foreign auto makers are looking at Gujarat, because of TN's problems Chronic power outages, labour issues and unaffordable real estate have taken the sheen off TN’s vaunted ecosystem for global auto makers Since the economic liberalisation in 1991, Tamil Nadu’s capital Chennai has become one of the major destinations for investments by the world’s leading automobile majors. Today, seven of the 20 top global auto makers are located in and around Chennai, sometimes referred to as the ‘Detroit of India’.

It is easy to see why auto companies, like Hyundai, loved setting up shop in TN. The state’s blend of financial incentives, stable industrial policy, a consistent stream of skilled and disciplined labour, proximity to a port, good infrastructure and abundance of power, make Chennai, an attractive location for a production hub.

And yet, dark clouds threaten to bring that smooth ride to an end. Not only are new automakers choosing Gujarat over TN, but erstwhile mainstays of the auto scene in Chennai have also decided to move. Just yesterday, French car maker Peugeot announced that Gujarat, not TN, is a front runner for a 4,000 crore plant that the Peugeot plans on setting up soon. More worryingly, Ford which established its first factory in India at Maraimalai Nagar, near Chennai in 1996 , announced a few weeks ago that its second facility—a Rs 4,000 crore investment with an initial installed capacity of 2.4 lakh units annually—will be set up in Gujarat, not Tamil Nadu. Ford said it selected Gujarat because of the state's pro-business environment. "Gujarat is a classic example of what works. It is run in a professional way. No Bureaucrats hurdles at all, no electricity, water and connectivity problems and incentives are also high. Somehow Tamil Nadu is missing these and has become more bureaucratic,” says R Dayal, executive officer, Maruti Suzuki Pvt Ltd. The only ones now left in TN are automakers Hyundai, which followed Ford to Chennai in 1996, as well as BMW, Mitsubishi and Renault-Nissan. Could these automakers be next in line to move?

A quick scan of the power situation in TN makes moving a no-brainer. Today power shortage in the state is around 2800-3000 mega watt (MW)—which mainly affects industry, not households. However, OEMs are not directly affected since the government has ensured secondary connections from alternate grids to automakers in the event of load shedding. The real problem with a power shortage lies in the fact that the car manufacturing process is largely the assembling of components procured from either ancillaries or component manufacturers—a domestic industry worth an estimated $30 billion today, of which Tamil Nadu comprises 30 per cent. Car makers outsource almost 80 per cent of the components as this helps in keeping the capital cost low. The industrial estates in and around Chennai, Coimbatore and Hosur abound in auto ancillaries and when they lose power, OEMs also bleed.

Srivats Ram, president, Auto Components Manufacturers Association (ACMA) and managing director, Wheels India Ltd, a TVS Group company said that cost of labour, power and fuel had essentially almost doubled in TN over the last three years. Component makers end up paying around Rs 12-13 for a unit of power due to usage of generators versus Rs 4-6 for grid power. “Since their profits have completely eroded, they are not investing in R&D and in expansions, which results in OEMs facing a shortage in components,” says K V Kanakambaram, president, Industrial Estate Manufacturer's Association

Chennai produces practically everything that moves – from bicycles to battle tanks and everything in between, including motorcycles, cars, tractors, earth-moving equipment, trucks and even rail road coaches—so it’s no surprise that auto manufacturing was able to thrive.

“My vision is to make Chennai the World’s largest auto cluster,” said Chief Minister Jayalalithaa, who paved the way for international auto majors in 1991, by getting US car manufacturer Ford to invest in the state in 1995 amid stiff competition from other states including Gujarat. Ford set up its facility at Maraimalainagar, 45 km South of Chennai, and invested about $1bn in a plant that has a production capacity of 200,000 cars and 250,000 engines. At present, 85 per cent of the vehicles are sold in the domestic market. Last year, the company shipped its first ‘Made in India’ Figo to South Africa and plans to expand exports to include 48 countries including North Africa, Mexico, South America, Arab Emirates and West Asia.

Last year was a good year for the state. According to its estimate, over $3 billion (around Rs 13,800 crore) was invested in Chennai by the car manufacturers by end of 2010. It is a vital industry for TN, employing about 2.5 lakh people. Total installed capacity in and around Chennai is 12.8 lakh cars every year, making Chennai one of Top 10 centres in the world for car manufacturing. In 2010 alone, more than one million cars were produced in Chennai, with a third of them exported to Asia, Africa and Europe.

“Every third car produced in India is from Chennai or around it. The area makes three cars every minute and one commercial vehicle every 75 seconds. The state has a capacity of 3.5 lakh commercial vehicles each year,” says a senior official from the industries department. On the commercial vehicle side, besides Ashok Leyland, the state houses Daimler, Caparo, Komatsu, Doosan and Caterpillar. Manufacturing in this region started in 1840, with Simpsons pioneering India’s automobile industry including making rail coaches and diesel engines. However, all of this storied history as well as recent accomplishments now stand imperiled.

The lack of power isn’t the only problem crippling TN’s auto industry. Labour problems threaten to sink it as well. At Hyundai Motor India, subsidiary of the South Korean auto maker, workers went on a 18-day strike at the end of April to demand recognition of the employees' union. The then company spokesperson came on record and said the company is moving in 20 productions to its Turkey plant, to cater to European markets. Tire maker MRF has experienced a debilitating strike—the Arakkonam (TN) unit was closed for 185 days in 2009, the company has said, causing a loss of around Rs 1,000 crore. The main problem was rival unions clamouring for recognition. Its workers have subsequently gone on strike again in October 2010 as well as June 2011.

According to A Paramasivam, Union leader at MRF, these are often due to the more taxing nature of jobs involved in the sector compared to others. Problems also occur due to wage disparities between contract and permanent workers and reluctance of companies to regularise casual workers—used often by car companies to keep costs low—and recognise the Unions. A mechanism to measure corporate governance practices in automobile companies is required in order to avoid frequent labour unrest in the state.

Two major industrial estates—Guindy and Ambattur—in Chennai, have lost business worth over Rs 1,000 crore due to shortage of labour and power. K V Kanakambaram, president, Industrial Estate Manufacturers' Association said, engineering and automobile contributes only 30 per cent of the total Guindy Estate’s turnover, which used to be 100 per cent till 5-6 years back. Scheduled power cut in the Estate is 2 hours and unscheduled is around 2.5-3 hours. This brought down the production by 50 per cent.

Finally, it is ironic that a policy that was once a strength in Tamil Nadu has become a weakness. Real estate pricing according to industry experts is “killing the industry. Prices are now 200 per cent higher in TN. Even just setting up costs, sans the land price, is 30-40 per cent higher. “Remember if an OEM is investing Rs 1, rest of the people in the chain including suppliers invests Rs 4,” the expert points out. This is ironic considering that the state government had steadily accumulated a land bank through state industrial promotional agencies over the years to prevent this problem—and that too in a manner that avoided the conflict with farmers like Singur in West Bengal.

Can TN soothe the growing apprehension of automakers about setting up factories in the state? “Times are tough and commitment from the government is necessary to restore the state to its previous position,” says R Sethuraman, senior Vice-President - Finance, Hyundai Motor India. Unless the state government acts quickly, Tamil Nadu risks losing its pride, customers like Hyundai and its position as India’s premier auto hub.
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Old 1st September 2011, 16:44   #77
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Default Re: Chennai : A New Detroit Rises In India (WSJ)

Even in US almost all car manufacturers have plants in places other than Detroit. A car plant location is decided on many factors , and with a very long term perspective. In a large country like India , typically two plants are required by any car maker, at two different locations to cater to he market with minimal logistics and to spread the risk (read power problems, labour unrest, Govt policies etc.,). Ideally India should have 3 or more hubs, Chennai, Pune , Gujarat and NCR will fit the requirements. Probably one hub in the east may also come up.

Current power situation in TN is bad but a huge capacity addition planned in the next 2 years will cater to the requirement for future expansions. So the decisions are not planned based on the present conditions but how things will be in the next 5 to 10 years.

I don't think all manufacturers will put all their plants in one location, however good it may be.

For growth perspective of the country as a whole, it is better if industries are spread out among different states
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Old 2nd September 2011, 16:06   #78
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Default Re: Chennai : A New Detroit Rises In India (WSJ)

Finally, its out! Peugeot/Citröen goes to Gujarat. Another shoddy move by the TN govt., showed lazyness and the swift nature of Gujarat govt. attracted another automotive giant.

Tamil daily has the news: (They have posted a Hyundai and written a news about Peugeot/Citröen)

PSA Peugeot has zeroed in on Gujarat for setting up factory | ?????? ???? ?????????? ??????? ????????????? ??????? Dinamalar

ஆமதாபாத்: பிரான்சின் பி.எஸ்.ஏ பாஜியோ சிட்ரான் நிறுவனம், குஜராத்தில் 4,000 கோடி ரூபாய் முதலீட்டில் கார் தொழிற்சாலையை அமைக்க முடிவு செய்துள்ளது. சென்னைக்கு அருகில், கார் தொழிற்சாலை அமைக்க திட்டமிட்டிருந்த இந்நிறுவனத்தின் திடீர் மனமாற்றம், தமிழக அரசை அதிர்ச்சிக்குள்ளாக்கியுள்ளது.
இரு மாதங்களுக்கு முன்பு, பாஜியோ சிட்ரான் நிறுவனத்தின் உயரதிகாரிகள் குழு, தலைமைச் செயலகத்தில், முதல்வர் ஜெயலலிதாவை சந்தித்து, சென்னையில் கார் தொழிற்சாலை அமைப்பது குறித்து, பேச்சுவார்த்தை நடத்தியது. அப்போது, கார் தொழிற்சாலை அமைப்பதற்கான நில ஒதுக்கீடு உள்ளிட்ட, அனைத்து வசதிகளையும் தமிழக அரசு செய்து கொடுக்க தயாராக உள்ளதாக முதல்வர் தெரிவித்தார். இதையடுத்து, சென்னை அருகே கார் தொழிற்சாலை அமையும் என்று எதிர்பார்க்கப்பட்டது. ஆனால், தமிழக முதல்வரை சந்தித்த மறுநாளே, இந்நிறுவனத்தின் உயரதிகாரிகள் குழு, குஜராத் முதல்வர் நரேந்திர மோடியை சந்தித்து, அம்மாநிலத்தில் கார் தொழிற்சாலை அமைப்பது குறித்தும், பேச்சுவார்த்தை நடத்தியது.

Simply translated, a high level team from Peugeot met TN CM and CM assured of land and other facilities and the team from Peugeot went on to meet Gujarat CM. The investment amounted to 4000crores and this move by Peugeot has shocked the TN government. This was expected isnt it?
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Old 9th June 2015, 13:42   #79
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Default Make in India : Chennai pioneering in Automotive Exports

Two interesting news from both The Hindu and Business Today on the same day lead me to write this note.

BT Spoke of Ford Motor Company's aspirations for exporting Indian Made EcoSports for US markets; while The Hindu mentioned the new L&T Port which can now ship Trucks.

From what I know companies like Suzuki, Hyundai, Bharat Benz etc are already exporting through these ports in Chennai. The article talks about Trucks, Earth Movers, Farm Tractors etc Made in India shipped through these ports. I am sure our fellow Bhpians who has more information on these and the ones based in Chennai would have more thoughts here. In Fact, I Would be very interesting to start a thread which has pics of these Made in India cars at the Shipyard/being shipped etc. Are there other locations/manufacturers exporting cars abroad (Apologies for my ignorance) I know Tata, Mahindra etc are exporting their cars, but do not know through which port.

Talking about newer products being made in India, or the ones with International Specs, don't you think there is a Transfer of Technology advantage. I am sure they will be looking at developing more advanced/similar technologies or features for these cars with a far cheaper cost by using resources available in India. So there lies a tech advantage too than investments and Forex.

Feel free to post your comments or to correct me if I am wrong. Cheers

More on the news shared below. Please find links mentioned.

Sharing the most catchy part of the news is that the whole thing will be a part of Prime Minister Modi's "Make in India" program.
"Prime Minister Narendra Modi 's 'Make in India' programme is likely to get a boost from US automobile major Ford Motor Company as it looks to export India-manufactured SUV EcoSport to the US markets." Business Today 9th June '15
Name:  fordecosportreuters_660_060915114437.jpg
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Link to the article :

TheHindu spoke of L&Ts Port in Chennai which begins Truck Export to International Markets.
The port in Kattupalli becomes the third port in Chennai to have Ro-Ro (Roll in Roll off) vessels used for shipping automobiles.

Name:  LT Port.jpg
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Link to the article :
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Old 9th June 2015, 14:22   #80
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Default Re: Make in India : Chennai pioneering in Automotive Exports

Since we already have a thread for sharing these pics I think there is nothing more to comment here except for the possible TOT here. Mods feel free to move this thread if needed, more than happy to have shared the news.

Thread on Images of Imported/Exported cars.
http://www.team-bhp.com/forum/indian...ide-ports.html (Im-Ports & Ex-Ports (Sightings inside ports))

Thread on Nissan India's export story


Sharing a few pics I found online while searching for exports from Chennai Port.

Chennai : A New Detroit Rises In India (WSJ)-chennai-port-1-wiki.jpg
Hyundai's Accent & i20 Export Shipment lie in the sun waiting for their turn. (Source : Wikipedia)

Name:  Chennai Port www.automotiveproductsfinder.com .jpg
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Hyundai Santro Xing (Source : www.automotiveproductfinders.com)

Chennai : A New Detroit Rises In India (WSJ)-daciadusterexportsbeginatennoreportchennaitoukandireland3.jpg
Dacia badged Dusters for export to US & UK from the Renault plant in Chennai.
(Source : www.indianautosblog.com)

Chennai : A New Detroit Rises In India (WSJ)-www.carblogindia.com-4th-april-12.jpg
Toyota Etios Liva - 4th April 2012 (www.carblogindia.com)
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