Ford’s £80m EU loan boosts Turkey factory and Southampton closes

Ford's Turkey plant.

EU cash was made to Ford just before the company closed its Southampton plant – and it went to boost Transit production in Turkey.

£10m of UK Government cash was approved to help British Ford operations just days before the Swaythling bombshell was dropped.

The £80m EU loan to ramp up production of Transit vans in Turkey was signed off just months before Ford’s devastating Southampton announcement.

The loan from the European Union’s bank, was agreed in June as part of a billion dollar investment plan – about £600m – for Ford’s sprawling 395-acre site in Kocaeli which is taking over production of Transits from Southampton.

The government knew about the plan put in place to take the jobs at Ford away from Southampton and move them to Turkey.

Workers were never consulted over the details.

Chancellor George Osborne is one of the EU bank’s governors.

The Treasury has declined to comment.

Hampshire Lib Dem MEP Catherine Bearder said the Southampton job losses were “very disappointing”.

She said: “I can’t understand why the European investment Bank appears to have allocated funding in direct competition to jobs within the European Union.

“I will be questioning the people behind the decision to find out if the job losses in Southampton, Dagenham and Belgium were factored in when the cheque was written.”

The application for the loan from the European Investment Bank was made in October last year to finance the modernisation of the plant for the next generation of Transit vans.

Ford announced last week it planned to close its Swaythling factory in July with the loss of more than 500 jobs due to a sharp fall in European car sales.

Ford is forecasting European losses of £930m ($1.5bn) and said it could sustain two Transit factories.

A presentation for potential investors reveals that Ford Otosan, the company that runs the Turkish plant in partnership with Ford, had sales of £3.9bn ($6.3bn) last year and made a £245m ($396m) net profit.

It sold 35,000 Transits in Turkey last year and shipped 148,000 abroad.

Ford plans to increase its Transit production capacity there from 210,000 to 290,000 vans a year by 2014.

The Southampton plant, which assembled 28,000 Transits last year and has been making them since 1972, has seen its workforce reduced in recent years to just 500, operating on a single shift.

It is due to close despite the Transit remaining the UK’s number one commercial van with sales of around 60,000 last year.

Union bosses have said Ford’s decision to invest in its cheaper overseas factories such as Kocaeli were the “death knell” for Southampton.

The eight-year loan, with a two year grace period and a two per cent interest rate, is seen as extremely cheap money when Turkish inflation is running at around nine per cent.

The European Investment Bank was unavailable to comment on whether any guarantees on jobs in the UK was sought prior to agreeing the Turkey loan.

The EIB is the European Union’s bank, owned by the 27 member states, and lends out money to various growth and jobs promoting projects across the EU and its borders.

Britain is joint top contributor to the bank’s core funds along with Germany, France and Italy, putting up around £30bn each.

But it raises the bulk of its lending funds from international money markets.

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One Response to Ford’s £80m EU loan boosts Turkey factory and Southampton closes

  1. lasancmt says:

    As usual Brexit shouters lay all blame at the EU when this clearly is the European Investment Bank doing this, of which like this blog confirms, George OsBorne is a governor.

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