Ford increases India investment

today announced plans to invest $500m to expand its

operations.

According to Ford, the new investment will fund several new initiatives, including the expansion of Ford India's 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 $875m, and is said to underscore its plan to elevate India as one of the strategic production hubs for small cars in the company's Asia Pacific and Africa region. In 2007, Ford announced a $500m investment to build small cars in Thailand. Prior to that, Ford began production of small cars at a new $510m plant in Nanjing, China.

John Parker, executive vice president, Asia Pacific and Africa, said, ‘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.’

The overall investment plan for India has already commenced, and will be implemented in phases over the next three years. The first phase currently underway 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.

A significant part of the investment will be utilised 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 set to commence within the next two years, increasing our overall annual production at the expanded plant to 200,000 units by 2010.

The second major component of the investment plan is a new, fully integrated engine manufacturing facility to be constructed adjacent to the current vehicle plant. This facility will be capable of manufacturing 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.