Brussels, 07/06/2001 (Agence Europe) - On Wednesday, the European Commission decided to open detailed inquiry proceedings into aid that Spain is planning to grant to the Ford plant in Almusafes (Valencia). At this stage, it has not been able to ascertain whether the aid meets the criteria of the Community framework for State aid to the motor vehicle industry, and has asked Spain to forward any comments within one month.
In December 1999, Spain had notified a regional aid project involving the sum of around EUR 16 million for investment by Ford in its engine plant in Almusafes. In 1999, Ford produced 1,252,000 engines on European sites, including 514,000 engines of the Zetec and HCS types in the Valencia plant. In the context of the project notified, the Spanish plant must move on to the production of a new motor, the "I4", which will be fitted on models such as the Focus and Mondeo from 2003 . Necessary investment amounts to EUR 334 million for the 2000-2003 period.
According to the Spanish authorities, Ford could have chosen the Bridgend site (UK) instead of Valencia for the investment. They therefore carried out a cost-benefit analysis comparing the costs of the different sites possible and concluded that Valencia would have a comparative disadvantage of 10.8%, which was sufficient to justify 4.88% aid. The Spanish authorities, however, were unable to provide sufficient evidence that the investor really considered the UK site as a viable alternative to Valencia. In addition, as things stand, the cost-benefit analysis does not prove that the choice of Valencia actually involves a cost disadvantage compared to Bridgend. Among the Commissions main doubts are: the justification for the notified costs for machinery and equipment, the inclusion of costs related to redundancies if the project did not go ahead in Valencia, and the costs related to shipping finished engines to assembly facilities. It has therefore decided to open a detailed investigation and has asked Spain to provide all the information necessary for examination of the case.