Romania offers to extend Ford production target deadline, conditional on 130 mln euro investments

Romania offers to extend Ford production target deadline, conditional on 130 mln euro investments Author: Ford Romania. Licence: All rights reserved.

BUCHAREST (Romania), August 26 (SeeNews) - Romania's finance ministry said on Friday that it is proposing to extend to 2025 from 2017 the deadline by which U.S. carmaker Ford's local plant should meet the production volume target envisaged in the plant's privatisation contract, provided that the company invests 130 million euro ($146.8 million) in it by 2019.

The production target of 810,000 cars and 1.5 million engines will be pushed to 2025 from December 31, 2017 if Ford invests 100 million euro in the making of a new model in its Craiova plants, in southern Romania, and an additional 30 million euro in engines production by the end of 2019, the finance ministry said in a press release.

In 2015, Ford Romania produced only 47,967 vehicles, down 9.2% from the previous year, according to data from the Romanian Car Producers and Importers Association, APIA.

However, if Ford and the ministry fail to reach an understanding on the new terms proposed by the ministry, the carmaker will not be obliged to maintain its investments in Craiova after 2017, the ministry added.

If the carmaker accepts the proposed conditions but fails to reach the envisaged production target within the suggested timeframe, Romania will take back the state aid which it has granted Ford.

During 2008-2012, the carmaker received 75 million euro in state aid, which it has complemented with 869 million euro in investments to date.

One of the ministry's aims with the proposed agreement is to maintain the 2,700 workplaces at the plant and to possibly raise their number.

Romania aims to cash in 230 million euro contributions from taxes which would be paid by Ford during 2014-2025 and expects a multiplying effect of 30 billion dollars in the local economy from the carmaker's investment.

In March, Ford said it will spend up to 200 million euro to expand its plant in ​Craiova, so as to start assembling the EcoSport small SUV model there.

Presently, EcoSport is produced in Ford's Indian plant in Chennai but as of the autumn of 2017 most of the production will be moved to Craiova, where the SUVs sold in Europe, excluding Russia, will be assembled. The Chennai plant will continue to build the EcoSport for domestic sales and for other markets around the world.

Ford entered the Romania in March 2008, when it wrapped up the acquisition of a 72.4% stake in Automobile Craiova, the sole owner of car maker and distributor Daewoo Automobile Romania. In 2012, the plant in Craiova launched production of the B-MAX model, which it sells only on the European market. Ford also produces EcoBoost 1.0 litre- and 1.5 litre-engines in Craiova.

($=0.8853 euro)

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