A few weeks ago I asked where sewing would be done in the future. One could equally ask where cars will be made. Detroit has long been synonymous with building cars but that business has clearly been winding down. Now the Wall Street Journal offers a suggestion as to what will be the new Detroit (A New Detroit Rises in India’s South, Jul 9). It points to Chennai in the state of Tamil Nadu, India.Vodpod videos no longer available.
Major international car companies ranging from Ford to Hyundai to Renault/Nissan have been pumping money into the city. The city will soon have the capacity to produce 1.5 million cars per year — more than any one US state produced last year. So why Chennai?
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. …
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.
There is also an aspect of success following success. Part suppliers have followed the OEMs here so Chennai has an obvious appeal to any car maker arriving late to India. They can link to the existing network in Chennai or go it alone somewhere else.
This is an interesting story on how international supply chains develop. Where global companies can go depends on a number of factor but certainly having a good supply of labor and stable local government are important places to start.