BELGIUM: European Commission eyes Spanish state aid to Ford

The
European Commission said on Wednesday that the Spanish government had failed to
provide sufficient evidence that Bridgend in the U.K. had been considered as a
viable alternative to Valencia in Spain for the production of a new Ford engine
for the Focus, Mondeo and other cars from 2003 onwards.

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Brussels has therefore opened an in-depth investigation into a proposed payment
by the Spanish government of regional aid amounting to 2.7 billion pesetas ($US13.9
million) for the Ford plant at Almusafes in Valencia.

Investments of some 55 billion pesetas ($US278 million) over three years to
2003 are involved.

Spain had claimed that Ford could have chosen Bridgend for the investment.

The Madrid government carried out a cost-benefit analysis which showed that
Valencia would have a comparative disadvantage of 10.8 percent – sufficient
to justify 4.88 percent aid.

However "the cost-benefit analysis does not prove that the choice of Valencia
actually involves a cost disadvantage compared to Bridgend," said the Commission.

It added that it had doubts over the justification for notified costs for machinery
and equipment, the inclusion of costs related to redundancies, and the costs
related to shipping finished engines to assembly facilities.

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