SINGUR, India — Tata Motors released a tersely worded press release on Tuesday, stating that politically charged protests have forced the company to suspend work at the factory scheduled to produce the Nano city car. Production of the $2,500 Nano was to start within a matter of weeks.
The factory, located in the town of Singur, in the eastern state of West Bengal, India, was constructed for the sole purpose of building the Nano. The entire project, including the purchase of more than 600 acres of land, has reportedly cost Tata Motors upwards of $350 million.
The protests hinge upon allegations that Tata forced farmers from their land, and handed out payments that were a fraction of the land's value. Mamata Banerjee, the fiery chief of the Trinamool Congress, the West Bengali political party staging the protest, has demanded that Tata Motors return 400 acres of land surrounding the Nano factory to these farmers.
Tata Motors has stated that this land is necessary for 60 parts suppliers to the Nano. The company argues that keeping parts suppliers close to the plant is vital to maintaining the Nano's extremely low cost. However, rising prices for raw materials had already led many industry experts to question whether the Nano could ever meet its promised "1-Lakh" ($2,500) price tag.
According to the statement released by Tata Motors, work on the factory was close to completion. Up to 4,000 workers, including "several hundred young residents from around the [Singur] region" were said to have been employed by the factory during its construction.
But continuing the work with the ongoing protests proved too risky. Employees failed to show up for work after threats from protestors. The protests have also snarled traffic in the region. Trucks loaded with food were left on highways, their contents rotting in the sun. A recent report in the Hindustan Times stated that almost all work at the plant had come to a halt.
Last week, while speaking with reporters, Ratan Tata, chairman of the Tata Group and Tata Motors, expressed concern that the factory in Singur was at serious risk. At the time, he did not rule out abandoning the Singur plant completely.
Commenting on the current situation, a Tata Motors spokesperson said, "The situation around the Nano plant continues to be hostile and intimidating. There is no way this plant could operate efficiently unless the environment became congenial and supportive of the project. We came to West Bengal hoping we could add value, prosperity and create job opportunities in the communities in the state."
What this means to you: With no factory to build it, Tata Motors will have to scramble to launch the Nano before year's end. What's next for the little car known as the "Model T of India?" — Nick Kurczewski, Correspondent
The factory, located in the town of Singur, in the eastern state of West Bengal, India, was constructed for the sole purpose of building the Nano. The entire project, including the purchase of more than 600 acres of land, has reportedly cost Tata Motors upwards of $350 million.
The protests hinge upon allegations that Tata forced farmers from their land, and handed out payments that were a fraction of the land's value. Mamata Banerjee, the fiery chief of the Trinamool Congress, the West Bengali political party staging the protest, has demanded that Tata Motors return 400 acres of land surrounding the Nano factory to these farmers.
Tata Motors has stated that this land is necessary for 60 parts suppliers to the Nano. The company argues that keeping parts suppliers close to the plant is vital to maintaining the Nano's extremely low cost. However, rising prices for raw materials had already led many industry experts to question whether the Nano could ever meet its promised "1-Lakh" ($2,500) price tag.
According to the statement released by Tata Motors, work on the factory was close to completion. Up to 4,000 workers, including "several hundred young residents from around the [Singur] region" were said to have been employed by the factory during its construction.
But continuing the work with the ongoing protests proved too risky. Employees failed to show up for work after threats from protestors. The protests have also snarled traffic in the region. Trucks loaded with food were left on highways, their contents rotting in the sun. A recent report in the Hindustan Times stated that almost all work at the plant had come to a halt.
Last week, while speaking with reporters, Ratan Tata, chairman of the Tata Group and Tata Motors, expressed concern that the factory in Singur was at serious risk. At the time, he did not rule out abandoning the Singur plant completely.
Commenting on the current situation, a Tata Motors spokesperson said, "The situation around the Nano plant continues to be hostile and intimidating. There is no way this plant could operate efficiently unless the environment became congenial and supportive of the project. We came to West Bengal hoping we could add value, prosperity and create job opportunities in the communities in the state."
What this means to you: With no factory to build it, Tata Motors will have to scramble to launch the Nano before year's end. What's next for the little car known as the "Model T of India?" — Nick Kurczewski, Correspondent
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