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Old 16th July 2010, 10:29   #1
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Default Chennai : A New Detroit Rises In India (WSJ)

A New Detroit Rises in India's South - WSJ.com

CHENNAI, India—This Indian port city, built around a former British fort, in many ways resembles Detroit circa 1910.
The metropolis of about five million people is booming as scores of international car makers and suppliers have set up shop. Ford Motor Co., Hyundai Motor Co, Nissan MotorCo., Renault SA, Dailmer AG and BMW AG all have converged here.
They are spending billions of dollars to make Chennai one of the world's biggest hubs of small cars for export as well as for increasingly affluent Indians. Soon, the city will turn out close to 1.5 million vehicles a year, more than any one U.S. state made last year.

Car-parts suppliers also are placing big bets on the city, formerly known as Madras. Tire company Michelin SA and window maker Saint-Gobain SA, both of France, are setting up some of their biggest factories globally in Chennai. Germany's Daimler, meantime, is building a multimillion-dollar test track.
All the investment has generated jobs for more than 200,000 people and accounts for 12% of the economic output of the state of Tamil Nadu.
The kind of manufacturing being done in Chennai is what India needs to bridge the gap between its agricultural work force, which makes up 60% of its population, and high-end services industries, such as outsourcing, that employ relatively few.

Unlike China, India hasn't been able to attract as many foreign investors to set up factories because of bureaucratic barriers and volatile politics. But Chennai's boom is a sign that India can create a productive environment when economic circumstances are right and demand is there. India's economy is expected to grow 9% this year and Tamil Nadu has worked to minimize barriers to investment.
Hyundai has invested $2 billion here, and recently expanded to be able to produce 650,000 cars a year. It is not only cheap factory-floor labor that attracted the South Korean company, but also an abundance of low-wage engineers to program the robots that help churn out vehicles.
On the other side of town, Ford has invested close to $1 billion, deploying production-line technology it doesn't even use in the U.S., including car-painting robots and a deep-water testing pool to ensure cars won't leak during monsoon floods.
Michael Boneham, the Chennai-based managing director of Ford's India operations, said the educated labor, a consistent industrial policy, access to a port and government financial incentives all played a role in luring the U.S. car maker to the city.
"India is now on the radar as one of the two most important markets for Ford strategically world-wide," the other being China, Mr. Boneham said.

Ford, among the first foreign firms here, recently announced its best-ever quarter in India: Sales more than tripled in the second quarter compared to a year earlier to 22,858 vehicles thanks to its recently expanded Chennai facilities.
The state of Tamil Nadu has been better than most Indian jurisdictions at providing the land, roads and electricity that the car industry needs. It also set up a single office for them to obtain the dozens of government approvals and licenses required to start or expand a business.
Big projects in India too often run into problems when local governments change parties. But when the state government was taken over by the DMK from the AIADMK in 2006, auto executives said they noticed no change in how they were treated.
The influx of foreigners and foreign money is altering this historic city. In the largely vegetarian region there is little meat for sale. But the Seoul Restaurant is packed with Korean families grilling beef at their tables.
The student population at the Chennai American School has quadrupled to close to 800 as new pupils have arrived from the U.S., Japan, Europe and Korea. A sprawling amusement park across the street from the Hyundai factory, a French bakery, evangelical Korean churches and Japanese grocery stores have popped up in recent years.

"The city has really changed," said R. Sethuraman, the Chennai-based senior vice president of finance and corporate affairs at Hyundai's India unit. "We used to only have South Indian food."
New malls and apartments are being built to serve the growing middle class of auto workers. The state's technical institutes, known for producing computer programmers and engineers, are switching focus to skills useful at car companies.
The growth of the car industry hasn't been without problems. Hyundai unions have staged several strikes to demand better treatment of workers, traffic has become more congested and rents in some of the best neighborhoods are now out of reach of the average Indian.
But Chennai's production capacity is set to rise even further. Japan's Nissan just started making cars here in May after investing close to $1 billion, and it plans to ramp up to more than 400,000 cars a year. Its Indian-made subcompact, the Micra, will hit global roads in October.

- Eric Bellman

Last edited by petrol_head : 16th July 2010 at 10:32.
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Old 16th July 2010, 10:43   #2
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Nice to hear, availability of spares isn't far off too either like this
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Old 16th July 2010, 10:45   #3
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Old 16th July 2010, 10:50   #4
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Video - India's Detroit City - WSJ.com

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Old 16th July 2010, 11:02   #5
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Default Detroit of India

Hi Guys,

I think the Pune region was a contender but Chennai has the following advantages and hence leading the way in INDIA.

i) Seaport

ii) International Airport

iii) Political Will.


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Old 16th July 2010, 11:24   #6
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^^ And plans to improve infrastructure. i.e., there is an elevated toll way coming up from Marudavayal right up to the seaport. Power plants are being added at Ennore area and Water supply (though not a criterion for Auto industry) from the 100 MLD Seawater desalination plant.
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Old 16th July 2010, 11:28   #7
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Originally Posted by ex670c View Post

iii) Political Will.
IMO this plays a very important part. Irrespective of whoever is in power at any given time, there is continuity policy.

Last edited by Gansan : 16th July 2010 at 11:30.
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Old 16th July 2010, 11:48   #8
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Detroit? What Detroit?

I would associate Chennai as the motor city without any relation to Detroit. Detroit is dead.

BTW what about Ranjangaon/Chakan/Pune belt and the Gurgaon region?
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Old 16th July 2010, 11:50   #9
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IMHO Pune is the second best place in India with the third place going to the Industrial area around NCR. Just hope Peogeot-Citroen make it here too!
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Old 16th July 2010, 11:56   #10
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Great for Chennai.
Hope different cities succeed in different things and we can have a prosperous India overall.
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Old 16th July 2010, 13:26   #11
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Originally Posted by devarshi84 View Post
Detroit? What Detroit?

I would associate Chennai as the motor city without any relation to Detroit. Detroit is dead.

BTW what about Ranjangaon/Chakan/Pune belt and the Gurgaon region?
Pune region has:

TATA, FIAT, Mahindra, Merc, VW, GM, PAL, I guess Force as well and Bajaj
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Old 16th July 2010, 13:33   #12
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Bangalore and Hyderabad are good in IT atleast people see Chennai as good place in one aspect. Chennai managed to woo the manfuacturers while the Banagalore and Hyderbad were wooing IT companies.

One thing about Pune though is that though conducive to the busienss, it is landlocked and should depend on Mumbai for the exports.

Pune still holds good if a company wants to manufacture just for indian consumption, it also helps as it is in the central belt, between North and South India.
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Old 16th July 2010, 15:21   #13
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Dont forget Kia and Peugeot that are also setting up shop in Chennai. Also, Proton is also most likely to come here as they have been mulling all sorts of JV's in the Chennai Area.

Another key point to note for Chennai is that it supports Toyota and Volvo with alot of components. Hence highlighting the importance of the Chennai-Bangalore Industrial Corridor

KIA: Korea's Kia Motors mulling Chennai plant - dnaindia.com
Peugeot: Peugeot to re-enter Indian market-Automobiles-Auto-News By Industry-News-The Economic Times
Proton: Malaysia's Proton to roll in small car
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Old 16th July 2010, 15:47   #14
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Apart from accesibility to a sea-port, government initiative, infrastructure, et al, another very intangible thing plays a very important role in helping foreign OEMs decide where to set up shop - the Indian guy who is doing the due dilligence as an employee in the foreign firm.

There was a time when a renowned OEM was deciding where to set up its commercial vehicle plant in India and the guy helping make up the mind of the OEM was from Chennai. Now the OEM in question already has a greenfield plant in Pune; and the equations were in favor of both the location, but ultimately the decision went in favor of Chennai. The guy who helped this negotiation now works from his hometown
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Old 16th July 2010, 15:53   #15
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ironically, considering the current state of US auto industry (though there seems to be some sort of revival in the last couple of months), calling it detroit is no longer a complement for chennai

worked in pune and was amazed at the number of companies then...looking forward to a visit to chennai sometime in the future
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