Ford hopes to get Craiova OK this month

By John Revill, Automotive News Europe

Ford of Europe expects to get approval this month from the European Commission to complete the purchase of the former Daewoo Motor factory in Romania.

But executives at the automaker admitted to mounting frustration over the EU inquiry, which they say has delayed the start of production at Craiova in southwest Romania. Craiova is about 30 minutes' drive from Pirelli's tyre factory in Slatina.

" We have done everything we have been asked to do, and done everything by the book and by the rules," said John Fleming, CEO and president of Ford of Europe. " And then we were told there's a problem."

Ford made an agreement in September to pay €57 million to acquire the Romanian government's 72.4 percent stake in the plant.

It had hoped to start production of a small car at the factory later this year and has committed another €675 million to upgrade it.

But the deal has been on hold while the European Commission reviews it for possible competition violations, including employment guarantees and Ford's demands for protection against previous Daewoo debts.

Fleming told Automotive News Europe in a telephone interview that he was optimistic about the outcome, but disappointed Ford had to face an inquiry.

He added that he hoped to get final EU approval for the acquisition soon.

" We continue to be optimistic about our chances to secure the plant, working with the Romanian government," Fleming said.

The Ford of Europe boss said the inquiry had stalled plans to restart production at the Craiova plant.

Production is now set to begin in 2009, rather than by the end of 2008 as originally planned, he said.

" I'm not going to complain about it," said Fleming, citing expectations that approval would come soon. " But it has been frustrating."

Fleming declined to reveal which models would be built at the plant, but confirmed it would be a small car and a commercial vehicle.

Ford has pledged to build 300 000 units a year in Craiova with 60 percent local content by late 2011.

Earlier this year ANE reported how Ford has begun sharing plans and specifications with suppliers in a bid to jump-start production when clearance comes.

Fleming said: " We believe we need a source in a country like Romania to help us grow in eastern Europe."

A spokesman for the European Commission said: " The case is still under consideration."

From Automotive News Europe (A Crain publication)