FRANKFURT, Sept 12 (Reuters) - Ford of Europe (F.N: Quote, Profile, Research) on Tuesday signed a deal to acquire 72.4 percent of Automobile Craiova from the Romanian government and Chief Executive John Fleming said the factory would be used to boost the company's growth in Europe but not to make a new cheap car.
"We will make 300,000 cars and 300,000 engines per year at the plant. I cannot give you details of the models ... but we will not use the plant to make an ultra-low cost car," Fleming said. France's Renault (RENA.PA: Quote, Profile, Research) owns Romania's Dacia which makes the Logan no-frills car.
Fleming said Ford would pay 57 million euros for the stake and spend another 675 million euros to upgrade and modernise the plant. By 2012, Ford expects to spend about on billion euros per year in Romania to support the Craiova operations.
Fleming said 90 percent of the plant's output would be exported.
The job numbers at the plant will rise to 7,000 from 3,900 people and Romanian Prime Minister Calin Popescu-Tariceanu, present at the signing ceremony at the International Motor Show here, said that for every one job in manufacturing there would be four more jobs in the supply industry and he hoped Ford and Renault would attract more supply operations to Romania.
Fleming said Ford aimed to source 'the vast majority' of parts locally for the future car to be made in Romania. Production is expected to start toward the end of 2008. He said there would be no job or capacity cuts at other European plants but said Craiova would help eliminate a capacity bottleneck.