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Business

US Carmaker Ford to Invest 200 Million Euros in German Plant

Ford said Monday it would invest 200 million euros ($260 million) in its Cologne plant in Germany to meet demand sparked by a government subsidy even as the carmaker said it would cut overall European production.

A worker at the Ford plant in Cologne, Germany

Workers at the Ford plant in Cologne can count themselves lucky

At a press conference on Monday, March 16, Ford said that overall, it would cut production in Europe due to poor demand, but would take steps to avoid job losses.

The company said in a statement that it would adapt output in Germany, Romania and Spain to the "unprecedented decline in the European new car market and the continuing negative economic outlook."

Ford's plant in Valencia, Spain will operate on two shifts instead of three, and a plant in Saarlouis, Germany will follow through on a previously announced 20-day production pause.

But its plant in Cologne, western Germany will continue full production to meet demand sparked by the German government's subsidy that offers people willing to scrap their old cars a cash rebate of 2,500 euros on a more environmentally-friendly new car. The subsidy has boosted sales of smaller cars such as the Fiesta and Fusion models.

The statement said that the Cologne plant would "share with Ford's Craiova (Romania) engine plant the production of a new, small-displacement EcoBoost advanced petrol engine."

More action could follow

The US carmaker employs some 70,000 people in Europe, where it has 22 factories. In Germany, the company is bound by a union agreement to maintain jobs at their current level.

Last month, Ford's European sales dropped by almost 12 percent from the same period last year to just under 89,000 cars, according to statistics from the European Automovile Manufacturers' Association (ACEA).

"Ford Europe must return to sustainable profitability as soon as possible," said John Fleming, Ford's head of the region, in a statement. "We will do whatever it takes to ensure the continuing viability of our business, and further actions can be expected."

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