From Site Selection magazine, September 2007
AddThis Social Bookmark Button

Homegrown Heft

The Indian government plans to see 25 million jobs driven by industry by 2016.

f the 157 transportation industry projects tracked by our New Plant Database since the beginning of 2006, 37 are in China. Fifty are in India, and nearly all of them are automotive-related. No wonder the industry already has created direct and indirect jobs for 10 million people. The Indian government projects that number to increase to 25 million by 2016, accounting for 10 percent of national GDP.
   In addition to OEM assembly plants from Hyundai, Daimler, BMW, Honda and GM, the nation of 1 billion is also welcoming multiple plants from homegrown companies Tata, Maruti Udyog and Mahindra & Mahindra.
   Early this year, Mahindra teamed with Nissan and Renault to announce a US$908-million new complex in the automotive capital of Chennai, Tamil Nadu, on a 925-acre (400-hectare) parcel. One of the largest production sites in India, it will ramp up to capacity of 400,000 vehicles by the end of its seventh year of production. The new plant, which will make vehicles for each carmaker in addition to powertrains for Renault and Nissan, will commence production in the second half of 2009.
   The companies said they chose Chennai because of "its well developed automotive and components industry, high education levels in its work force, and its overall infrastructure including its port facilities."
   "This is a red letter day in the globalization of the Indian automotive space," said Keshub Mahindra, chairman of the Mahindra Group.

Spinoff Near and Far
   "We appreciate the Tamil Nadu government's initiative in offering us a gateway to this state and providing the project with the necessary infrastructure to commence operations here," said Pawan Goenka, president of the automotive sector for Mahindra & Mahindra. "The advantages accrued to the customer by our synergies of cost, scale and engineering promise to set new benchmarks of quality and cost for auto manufacturing in India."
   Already a $4-billion, 40,000-employee conglomerate, Mahindra has multiple new plant projects including truck, tractor and commercial vehicle production under way in India.
   The February 2007 announcement followed a November 2006 announcement that only involved Renault and Mahindra. Nissan joined after pulling out of plans to develop an Indian plant with Suzuki. The final three-company plan is scaled down in size and scaled up in ramp-up time from that original announcement, which called for a capacity of 500,000 vehicles in five years. Mahindra and Renault already have a partnership making the no-frills Logan sedan, which now is ramping up production in Nashik to 4,000 vehicles a month.
   New supplier operations are already clustering around the area, including a $25-million, 300-worker new bearing plant from Timken, located in one of the country's special economic zones near Mahindra World City in Chennai. Timken's Indian operations currently include a bearing manufacturing plant in Jamshedpur and a Global Innovation Center in Bangalore.
   Indian industry also represents what the World Bank likes to refer to as "South-South" investment, or projects from a developing-world company into another developing-world country.
   In May, Tata Motors' sister company Tata Steel signed an agreement to build a 4.5-million-ton-per-year steel complex with Vietnam Steel Corp. in the Vietnamese province of Ha Tinh. Vietnam is a growing transportation manufacturing hot spot, welcoming projects over the past year from Daewoo Bus and Johnson Controls, as well as motorcycle and scooter plants from Honda and Piaggio.

Site Selection
Enjoy this original content? Bookmark it to share with your friends! AddThis Social Bookmark Button

Top of Page | Letter to Editor | Site Selection Online | SiteNet

Site Selection Online – The magazine of Corporate Real Estate Strategy and Area Economic Development.
©2007 Conway Data, Inc. All rights reserved. SiteNet data is from many sources and not warranted to be accurate or current.