Blair faces Ford threat over aid to Welsh plant
Thursday 27 May 1999
In a visit to Downing Street, Jac Nasser will tell the Prime Minister that the Ford engine plant at Bridgend, south Wales, is under threat if ministers refuse to increase a proposed grant of pounds 30m.
It is thought senior Ford executives have become increasingly frustrated by Britain's refusal to match the level of aid available in other countries. A recent visit to the company's Detroit headquarters by Alun Michael, leader of the Welsh Assembly, made matters worse because he held out little hope of an enhanced financial package, according to some sources.
At issue is whether Ford chooses Bridgend to produce its new petrol engine, code-named I4/I5, which will require initial investment of an estimated pounds 250m. This will replace the Zetec-SE engine used in a wide range of models, including the Fiesta, the Mondeo and the Granada. Bridgend also produces a V8 engine for Jaguar. The Welsh works is Ford's largest petrol engine plant in Europe, producing nearly half a million units a year and it is considered to have a good productivity record.
Sources close to the plant say without the new engine the works would close. "Bridgend produces engines and it has to have a replacement when the Zetec reaches the end of its life," said one manager. The plant in mid-Glamorgan, which supports another 2,000 jobs in the area, is in an unemployment blackspot.
The plant at Cologne in Germany which has recently secured investment of pounds 150m and the complex at Almussafes near Valencia in Spain, are competing to make the I4/I5. Executives hope to reveal the identity of the successful plant in the autumn.
It is thought Ford's announcement on Tuesday that it was spending pounds 300m on a regeneration project at its Dagenham plant was timed to impress Mr Blair with management's commitment to investment provided public funds were made available. Ford's spending is being topped up with pounds 168m from local authorities to help rejuvenate the area near the plant.
Garel Rhys of Cardiff Business School said the company had been disappointed with the British response: "Ford has not been impressed so far with the commitment of the Government to an internationally mobile project."
Professor Rhys, an expert on the automotive industry, said the I4/I5 engine was vital to the future of Welsh plant: "It would not close tomorrow if it did not get the project, but it would definitely run down by the middle of the new decade. That is a horrifying prospect. Britain runs a very tight regime as far as state aid is concerned.
The Government is off the pace compared with both developing and highly developed countries - not just Spain and Germany. The message is: if you want to take part in the poker game, you must have a big enough stake."
A Ford spokesman it was a "bit dramatic" to say the plant was in imminent danger. "Management and unions get on very well there, but we are in a competitive business so it has got to prove itself to secure the new engine."
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