Tuesday, March 10, 2009

Ford to receive euro143 million state aid from Romanian government

BUCHAREST, Romania (AP) — Ailing U.S. carmaker Ford Motor Co. will receive euro143 million ($182 million) in aid from the government of Romania, where the company owns a carmaking plant, lawmakers said Tuesday.

The state aid, spanning until 2012, will support production of cars and engines at the factory in Craiova, in southern Romania.

The money to be given to Ford is considered state aid for regional development, Romanian lawmakers said.

In 2007, Ford bought a 72.4 percent stake in the state-owned Automobile Craiova, paying $88 million and vowing to invest $1 billion to upgrade and expand car production.

At the time, Ford said the first vehicles would come out of the factory in 2009. The plans presented by Ford at the takeover included a production increase from 16,000 in 2009 to 300,000 within four years.

The takeover was delayed when the European Union launched an investigation into the sale. The EU's executive arm said the stake was worth $132 million and the Romanian state had lost $42 million. Ford agreed to pay the higher sum.

With two carmakers — Renault-owned Dacia and Ford — Romania had ambitions to become the key car manufacturer in southeastern Europe.

But the economic crisis put brakes on the plan.

Romanian authorities said Tuesday they are in preliminary talks with the European Union and the International Monetary Fund for a loan that could reach euro19 billion ($24 billion).

Dacia, which has recently announced plummeting sales, was hit hard by the economic crisis. The factory in Romania, which employs 14,000 people and is located northwest of Bucharest, has closed several times since November to reduce production and cut costs.

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