The European Commission says it will investigate a £17.4 million ($24.97 million) aid package the U.K. granted toMotor Co. for investment at the auto maker’s Bridgend (South Wales) engine facility.
plans to invest £243 million ($347 million) at Bridgend before 2004 in an effort to boost capacity of both V-6 and V-8 engines produced at the plant. The Bridgend plant produced 700,000 engines in 2000 and expansion plans call for output to rise to 1,075,000 units by 2004. The engines will be supplied to the Ford, Jaguar, Land Rover and brands.
U.K. authorities granted the aid package after Ford considered partial production of the engines at its Cleveland, OH, engine plant and purchasing additional volume from another manufacturer.
The commission says it has not been able to establish whether the aid package meets the guidelines of state aid to the motor vehicle industry. The commission’s main concern revolves around whether the U.K. was justified in comparing production costs at Bridgend with a location outside of Europe. Commission rules require cost comparisons be completed on identical projects. The U.K. must respond to the Commission’s inquiry by March 13.