Blog: Dave LeggettCoup for Portugal

Dave Leggett | 9 January 2008

Volkswagen's announcement of new investment at its Palmela (Autoeuropa) plant is something of a coup for Portugal and reflects a lot of hard work to make the plant work after Ford quit the JV in 1999 leaving a massive hole in the plant's 120,000-unit capacity. But it has been clear to all concerned that the authorities in Portugal wanted to hang on to this plant at all costs; there have been tax breaks and other creative incentives for VW that won't stir things up in Brussels.

This new investment comes at a time when the centre of gravity for Europe's auto industry is moving east. Take a look at a map. Palmela is on the coast on the western side of the Iberian peninsular, near Lisbon. We're talking outer western fringes of Europe and a long way from Europe's main centres of population. But it has a deep water port next door and that's what really makes it work. Some 95% of the vehicles made there are straight out by ship and that means simple and relatively low-cost logistics compared with road or rail over long distances.

PORTUGAL: VW plant production doubling


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