Ford’s 'International Engine of the Year 2012' Enters Production in Romania
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Ford's (NYSE: F) Romania plant has started the production of its award winning EcoBoost 1.0L – 125Hp petrol engine simultaneously in Craiova, Romania, and Cologne, Germany. The company announced an estimate of 30,000 engines to be delivered from the factory in south-east Romania during the second half of 2012, followed by an increase to approximately 150,000 units in 2013. According to Ford Romania's President, Jan Gijsen, the aim is to produce 800,000 units from the 1.0L EcoBoost engine by 2015, to be divided between the two Ford factories according to the evolution of sales in the various markets.
The company has recently finished an investment program worth 620 million EUR ($845 million in 2007 dollars), six months later than planned, and also six months ahead of the deadline agreed in the (re-)privatization contract it had signed with the Romanian Government in September 2007 for the takeover of the former Daewoo Romania factory. According to the contract, Ford would invest a minimum of 250 million EUR (or $340 million in 2007 dollars) of the total amount in the engine production line, that would have a capacity of at least 250,000 engines per year (350,000 actual capacity). Meanwhile, the Romanian Government would provide non-refundable financial support, through its Privatization Agency, limited to 75 million EUR or $102 million (38 million EUR for the engine production facility and 37 million EUR for the car assembly line), and develop the local and regional infrastructure to support the massive expected inflow of components and outflow of automobiles and assembled engines. Every 1.7 minutes, a car comes out of the factory in Craiova.
The new EcoBoost 1.0L (999 cubic centimeters, or roughly 61 cubic inches) is the smallest petrol engine that Ford Motor Company produces worldwide and is destined to equip the European version of the Ford Focus, as well as the Ford C-Max and the brand new Ford B-Max. It is also due to reach the markets in the US, Asia Pacific and Africa next year, with both the 100Hp and 125Hp versions turbocharged.
Another EcoBoost engine, probably the 1.5L petrol fueled one, is planned to be built in Craiova. According to the company president: “Craiova is the place to be right now, as a car manufacturer. We started here practically as a Greenfield investment, we took over and built a new factory that is growing and benefits from completely different economic realities than other factories in Western Europe. The beginning of 2013 will find us with a second engine in production.”
Recently, Ford Romania has officially launched its new B-Max model, which has entered production in Craiova and is expected to reach 60,000 units in 2012 and 120,000 in 2013, out of which 99% will leave for export. The development of the new B-Max has created 500 jobs in the assembly line alone, followed by other thousands in the industrial area surrounding the Ford plant. Out of the company’s 37 suppliers for B-Max, 14 have made Greenfield investments. The list of suppliers includes Delphi Automotive (NYSE: DLPH), Textron (NYSE: TXT), Johnson Controls (NYSE: JCI), Continental Tires and Cooper Standard, all with at least one production facility in Romania.
Delphi Automotive currently employs 12,000 people in four production facilities across Romania, after investing 155 million EUR (around $200 million) in its latest factory, opened November 2011. The company came here in 1997 and now produces cables, electronic systems, valves, pumps and now also diesel injectors which generated sales worth 233 million EUR ($315 million) last year and are expected to rise significantly in 2012.
Through its Marine and Land Systems division, Textron has been active in Romania since 2010, when it had reached an agreement with Aerostar Bacau, a local defense company, to build Armored Security Vehicles (ASV) and Armored Personnel Carrier (APC) vehicles. Now, through its more peaceful plastic components division, it will operate a brand new, 10 million EUR ($12.5 million) plant that will serve Ford Romania, for the time being. Plans include the extension of the product range and capacity to attract new potential clients.
Like Delphi, Johnson Controls has also opened its fourth factory in Romania, aimed specifically at delivering parts for the future Ford models. The other three facilities, built between 2002 and 2004 supply car seats and safety elements for the interior to the national car brand, now owned by Renault and operated as its low-cost brand, Dacia. JC Romania has seen a twofold increase of its revenue between 2004 and 2010 (last year with available data), supported by the booming popularity of the Dacia among western European and Russian clients and has reached 200 million EUR ($275 million).
The first owner of a Craiova-built Ford B-Max is the President of Romania, Traian Basescu, who has tested his new, shiny red car in the parking lot of the factory. This is becoming a tradition for the President, as he already owns the first low-cost SUV made by Dacia, the Duster, also in shiny red.
OvidiuNeacsu has no positions in the stocks mentioned above. The Motley Fool owns shares of Ford and Textron. Motley Fool newsletter services recommend Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.