EC endorses €143 million aid to Ford for two large investment projects in Craiova, Romania

The European Commission has authorised, under EC Treaty state aid rules, €143 million of aid, which the Romanian authorities intend to grant to Ford for the production of vehicles and engines in Craiova, in the South West of Romania.

The Commission found the measure to be compatible with the requirements of the Regional Aid Guidelines 2007-2013 and in particular with the rules on large investment projects. Ford's two projects involve investments of €600 million in total. They are expected to significantly increase direct and indirect employment while at the same time stimulating investment by suppliers and a transfer of leading-edge technology, thus benefiting the further development of the region.

Ford's investment projects are aimed at the extension, modernisation and fundamental overhaul of two existing plants purchased by Ford to manufacture vehicles and engines respectively. For the first five years, the new engines manufactured at the Ford Craiova plant will almost exclusively be used within the Ford group. The total investment costs taken into consideration for the calculation of the aid amount to €435 million for the vehicle project and to €165 million for the engine project, while the actual aid amounts are €94 million and €49 million respectively.

The project is to be carried out in Dolj County, in the South West region of Romania, was deemed eligible for regional aid due to being a region with an abnormally low standard of living and high unemployment. The Romanian authorities expect that, based on the standard auto industry calculation parameters, more than 40 000 direct and indirect jobs will be created. Numerous suppliers to vehicle and engine production are expected to invest in facilities in the vicinity of the plants. Moreover, Ford indicated that it would actively encourage technology transfer in the region to develop a substantial local supply base.

The aid is not granted under an existing aid scheme. Moreover, due to the high amounts of aid and investment costs involved, the measure had to be notified to the Commission for individual assessment and clearance.