Brussels, 13/02/2002 (Agence Europe) - On Wednesday, the European Commission decided to initiate a formal examination procedure regarding £17.4 million aid for Ford's Bridgend plant
The aid, which provides for investments of £243 million for the period 2001-2004, is to provide for the creation of a further capacity of 325,000 V6 and V8 engines a year. The British authorities point out that Ford is considering an alternative solution consisting in manufacturing V6 engines in Cleveland (United States), engines intended to equip cars built in Europe. Regarding the V8, part of the production could be taken on board by an existing production chain in Bridgend, the remainder being subcontracted by another manufacturer. According to London, the alternative solutions would have been less costly than investment in Bridgend. Comparing the two options, the British authorities established that the investment in Bridgend would have a cost disadvantage of 10.2%, sufficient to warrant aid intensity of 5.37%.
For the Commission, this disadvantage has not been proven. Its doubts mainly concern the following two points: - whether or not it is justified, in this case, to compare the Bridgend plant with a site outside Europe, the engines produced being destined for vehicles assembled in the European plants of the Ford group; - the fact that the cost/benefit analysis should have been undertaken by comparing projects the industrial contents of which are different (in-house production for all engines in the Bridgend option and partial outsourcing in the Cleveland option), whereas the present rules governing the motor vehicle sector require that the cost comparison be carried out for identical projects. In addition, the Commission needs more detailed information concerning the training aid measures. It has thus given the United Kingdom one month to submit its observations.