Age, salary and a history of unionism appear to be top reasons why erstwhile Ford workers in Tamil Nadu are struggling to find new jobs
36-year-old Stephen worked at Ford’s Chennai factory for nearly 15 years and earned around Rs 72,000 per month.
Today, he struggles to find a job to support his family and to pay the EMI for the house he bought. The key reasons for this are his age, the high salary at Ford and the history of unionism and strikes in Ford. Stephen is not alone. Hundreds of former Ford workers see a question mark over their future due to these same factors.
In September 2021, Ford India announced its decision to stop vehicle assembly at their factory in Sanand, Gujarat by the fourth quarter of 2021, and vehicle and engine manufacturing at their factory in Maramalainagar, near Chennai by the second quarter of 2022.
Stephen, Mahesh and Shankar are among the thousands of employees who have lost their jobs because of this decision. They have all worked in the Ford factory for 10 to 15 years. Stephen and his friends have applied to many companies but have faced rejection everywhere. A few of them have now started driving auto rickshaws, hired cars or attached themselves to ride-sharing companies.
This scarcity of jobs is even though they live in the heart of a thriving auto hub. Today, Chennai is one of the largest automobile hubs in the world and new brown- and green-field projects are being announced regularly. Tamil Nadu is one of the top 10 automobile hubs in the world and home to India's top auto clusters. The State is often referred to as the 'Automobile Capital of India' and 'Detroit of Asia'. As one of the leading manufacturing hubs in the world, it has more than 1,300 factories linked to this sector, according to Tamil Nadu’s nodal agency Guidance data.
The state is also home to major OEM companies like Hyundai Motors, BMW, Daimler, Renault-Nissan, Ford Motors, Ashok Leyland, TVS Motors, Royal Enfield and Yamaha Motors. Nearly 35 percent of the country’s auto component production is produced in Tamil Nadu. As part of the next leg, the state aims for 30 percent of all electric vehicles sold in India to be manufactured in Tamil Nadu by 2030. The target is to attract $7 billion of investment (₹50,000 crore) in EV manufacturing that will also create 1.5 lakh jobs by 2025.
While these numbers are encouraging, for Stephen and his friends, they don’t open any doors.
“My friends and I have applied to dozens of companies, with no luck. The problem is our salary, which is 50 percent more than what a manager or supervisor in other factories gets as they are under contract. We are even ready to take a 50 percent salary cut. But we are still unable to get the job as we are tagged as union-affiliated people,” says Stephen.
“One of his friends has now joined as a contract employee for Rs 17,000 (he was earning Rs 65,000 at Ford) in one of the foundries near Chennai,” he added.
All three joined Ford, 10 to 15 years ago. Stephen was the first to join Ford as a Government Apprentice for Rs 1,400 a month. His last pay cheque was Rs 72,000. Like his friends, Stephen bought a house and a vehicle on EMI, but all his plans were shattered when Ford announced its decision to wind up operations stating unfavourable market conditions.
HR heads of automobile and auto component companies in and around Chennai have agreed that salary and unionism are the key reasons that these workers are unable to find other employment. There are, however, two additional important reasons — the age factor and culture fit.
A senior HR head of one of the largest OEMs gave an example. When the Nokia factory was closed at Sriperumbudur, near Chennai, thousands lost their jobs. At the time, some MNCs as well as domestic mobile and electronics companies acquired the lands, infrastructure and the workers of the factory that closed.
One of the MNCs, which acquired a huge chunk of the workforce is now struggling. Workers who came from Nokia were permanent employees who worked for five or six hours and enjoyed several benefits.
When they came to the new factory, they had to start from the beginning and to work for eight or nine hours in line with the contract workers and were not getting the same benefits that they got when they were permanent employees. This is causing disquiet among the workers.
The other big problem is age. Those who have over 10-15 years of experience are mostly in their 40s. This is an age when work output drops compared to younger people.
“This combination of age, culture, union background and salary are the key reasons why they are not getting jobs,” said the HR head.
Ford India and the Chennai Ford Employees Union (CFEU) recently inked the Settlement Agreement or the deal for the severance package. The company has also announced a `sign-off’ bonus of one-month salary in addition to the lump sum severance package.
While the 2,592 permanent employees have agreed and signed, the contract workers are not happy with the decision and they are still protesting the Ford management. They also requested the state government to take over the facility. Recently they sat on an arterial road and blocked traffic movements for a few hours.
The final settlement package (an average equivalent of 140 days of gross wages per completed year of service and additional Rs 1.5 lakhs lumpsum per employee) signed today translates to an average of about 5.2 years / 62-month of salary for each employee (from a minimum of 4.1 years i.e., 49 months to a maximum of 9.0 years i.e., 108 months). The cumulative severance for each employee will range from a minimum amount of Rs 34.5 lakhs and a maximum cap of Rs 86.5 lakhs, the company had said earlier.
With Diwali to be celebrated this month, Ford India has also decided to pay an additional amount as a goodwill measure. This amount is equivalent to one month of gross wages as a sign-on or sign-off benefit for employees who complete the exit process by October 14, 2022.
While Stephen and his friends were not happy with Ford’s decision to close the factory, they appreciated the US auto major Ford for the compensation, which they described as ‘good’. Stephen, for example, got around Rs 50 lakh and got his salary even till last month.
He hopes to use the compensation to pay off his housing loan and start a new business or buy an auto rickshaw or set up a garage with whatever is left over.
Ford India had set up four plants in the country — vehicle and engine plants in Chennai and Sanand. The company sold its Gujarat facility for Rs 725.70 crore to Tata Passenger Electric Mobility.
The plant in Sanand includes the entire land and buildings, the vehicle manufacturing plant, along with its machinery and equipment, and transfer of all eligible employees of Ford India's vehicle manufacturing operations.
Ford India will continue to operate its powertrain manufacturing facility by leasing back the land and buildings of the powertrain manufacturing plant from Tata Passenger Electric.
Tata Passenger Electric has agreed to offer employment to the eligible employees of Ford India's powertrain unit when the latter stops such operations.
While Ford and its workers in Gujarat have found a way out, the futures of Ford’s Chennai factory workers remain uncertain.
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