Ford may receive state aid of 17.5 million euro in 2008

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U.S. carmaker Ford, which bought last year Automobile Craiova, will benefit from state aid of 17.5 million euro this year if it makes investments of 110 million euro in car production, according to a draft emergency ordinance posted on the website of the Ministry of Economy and Finance (MEF).
 
The total value of the state aid Ford will benefit until 2012 amounts to 143 million euro in lei equivalent. The aid is conditioned by the beneficiary’s making investments of 600 million euro.
Out of the total sum of the state aid, 94.45 million will be given, in the 2008 – 2012 period, for car production, and 48.55 million lei for engine production.
The aid for the engine production is conditioned by investments of 494 million euro in this sector by made until 2012.
 
Under the draft normative act, Ford will restructure the existing car production at Craiova plant, will change fundamentally the production process and will extend significantly the existing installations and production capacity. The two production lines will have a technical capacity of 300,000 automobiles per year.
The state aid for the engine production will be given as of 2010 and is conditioned by investments of 181 million euro.
 
The investments refer to the development and upgrading of existing facilities, inclusively the creation of a new production line, so that it reaches a production of 300,000 engines per year.
Moreover, Ford will not market any engine made in Craiova outside the group for five years after the date of finalization of investments.
 
The state aid will be given under the form of a partial repayment of the eligible expenditures made by the beneficiary of the aid.
The European Commission authorized, at end-April 2008, an aid of 143 million euro that the Romanian authorities intend to give Ford for car and engine production in Craiova, considering the respective measure is compatible with the stipulations of the Orientations on regional aid 2007-2013 and especially with the norms on big investment projects.
 
In the summer of 2007, Ford Europe, the European arm of the world’s third-biggest carmaker, bought from the Romanian state, represented by the Authority for Privatization of State’s Assets (AVAS), 72.4% in Automobile Craiova for 57 million euro.
Ford pledged to double the number of employees in Craiova, from 3,900 at present to 7,000 – 9,000 and invest 1bn euro in Romania by 2011. The Ford officials announced 90% of the cars made in Craiova would be exported.
 
Automobile Craiova has a share capital of 12.5 million euro. The Romanian state holds, indirectly, the control over Automobile Daewoo Craiova, through Automobile Craiova, where it is majority shareholder.
At end-August 2006, the Romanian state bought the 51% stake in Automobile Daewoo Craiova held by the Korean company Daewoo Motor Co, for 60 million dollars.
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