The acquisition by Ford of the former Daewoo plant in Craiova, will mark the direct entry of a second major carmaker onto the Romanian market, after Renault acquired the Dacia plant in Pitesti. It will also bring about the complete transformation of the area.
The privatisation of the plant in Craiova was conducted with the creation of Romania's second car manufacturing centre in mind, after the one in Pitesti. Craiova was this way expected to contribute to the economic growth and development of the country, as Prime Minister Calin Popescu Tariceanu recently pointed out.
The takeover of the Daewoo plant by Ford will have a similar effect in the Oltenia region as Renault had in Mioveni, which brought with it some of its traditional suppliers.
A number of significant investments have already been made in the area, such as Pirelli, which began a 170 million-euro investment project in a tyre factory located close to the metallic cord factory, held in partnership with Continental.
The representatives of the National Agency for Foreign Investments (ARIS) say Ford's investment in Craiova will make investors in the automotive component industry more interested in the area. ARIS officials could not, however, specify the exact value of investments expected for Craiova over the coming period, stating that it depended on a number of factors and not just on the price of land, and the proximity to the main client.
Almost eight years after the acquisition of Automobile Dacia by Renault, the total investments in the Pitesti area generated by the French company and its suppliers have exceeded 1.2 billion euros. These investments have created more than 25,000 jobs on the Dacia site, after Automobile Dacia initially generated a wave of redundancies.
Since the arrival of Renault, the unemployment rate in Mioveni stands at only 2.8% and in Pitesti at approximately 4%. Dacia generates approximately 65% of the local budget in Mioveni. Taking into consideration Ford's intention to boost the number of employees to 9,000, the unemployment rate in Craiova should witness a significant decline over the coming years.
With its takeover bid for the Automobile Craiova plant, Ford has committed itself to make direct investments worth 675 million euros and also to boost the number of employees to around 9,000.
John Fleming, Ford's chairman and chief executive in Europe did not specify exactly which models were planned for assembly in Craiova, but Fiesta, the small class car of the carmaker will probably be one of them, considering that it registered an over 65% growth rate in the first half of this year. The most sought after models on the Romanian market and the markets in the region are the small or compact class sedans whose prices range between 10,000-12,000 euros. This category includes Dacia Logan, which sold 47,641 units in the first half.
Ford's commitments for the Craiova plant include boosting production to 300,000 vehicles and 300,000 engines as of 2011, its total spending will gradually increase and reach one billion euros in 2012, says John Fleming.
Ford in Craiova
Committed to invest 675 million euros directly
Will boost the number of employees to about 9,000
Will increase production to 300,000 vehicles and 300,000 engines by 2011
Total spending in Romania will constantly increase and reach 1bn euros in 2012
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