September 12, 2007 / 2:34 PM / 12 years ago

UPDATE 1-AUTOSHOW-Ford invests in Romania car plant

(Adds further quotes and details)

FRANKFURT, Sept 12 (Reuters) - Ford of Europe (F.N) signed a deal on Wednesday to acquire 72.4 percent of a Romanian car plant that Chief Executive John Fleming said would be used to boost its growth in Europe but not to make a new cheap car.

“We will make 300,000 cars and 300,000 engines per year at the plant. I cannot give you details of the models ... but we will not use the plant to make an ultra-low cost car,” Fleming said of the Craoiva purchase.

France’s Renault (RENA.PA) owns Romania’s Dacia which makes the Logan no-frills car.

Fleming said Ford would pay Romania 57 million euros ($79.04 million) for the stake in Automobile Craiova and spend another 675 million euros to upgrade and modernise the plant.

By 2012, Ford expects to spend about one billion euros per year in Romania to support the Craiova operations.

Fleming said 90 percent of the plant’s output would be exported.

“I can confirm that we will start with a small car built solely in Craiova and we expect up to 90 percent of vehicle production to be exported,” Fleming said, adding Ford wanted to transform the plant into an industry benchmark for vehicle manufacturing in Central Europe.

Job numbers at the plant will rise to 7,000 from 3,900.

Romanian Prime Minister Calin Popescu-Tariceanu, present at the signing ceremony at the Frankfurt International Motor Show, said that for every one job in manufacturing there would be four more in the supply industry and he hoped Ford and Renault would attract more supply operations to Romania.

Tariceanu said he hoped the car industry could become a pillar for the Romanian manufacturing industry and he said Romania could become a big car making country.

Fleming said Ford aimed to source ‘the vast majority’ of parts locally for its cars made in Romania. Production is expected to start toward the end of 2008. He said there would be no job or capacity cuts at other European plants but said Craiova would help eliminate a capacity bottleneck.

It is the first new plant investment by Ford in Europe since its 1986 creation of a plant in Valencia, Spain.

Ford was active in the 1930s in Romania but lost its assets during World War Two.

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