The Turkish holding company, Koç Holding, which owns 41% of the Ford Otosan joint venture, is a Turkish industrial giant that still has business in Romania. Ford Otosan is a big company in Turkey. It produces 455,000 cars a year.
Unexpected information was sent on Monday by Ford Romania. The factory in Craiova becomes the property of a company with Turkish shareholders.
The ownership of the Ford plant in Craiova will be transferred to Ford Otosan, a joint venture in which Ford Motor Company holds 41% of the shares, Koç Holding AS Turkey owns 41%, and the remaining 18% is traded on the stock exchange.
Koç Holding AS is Turkey’s largest company in the industry, with a total turnover of 30 billion euros. The company is the only one in Turkey included in the Fortune Global 500, which is a hierarchy of the top 500 companies in the world. Koç Holding also has businesses in Romania, respectively Arctic Găiești, where it has invested 320 million euros, so far, through another company in the group.
Ford Otosan also owns three factories in Turkey, with an annual production of 455,000 cars. The company specializes mainly in commercial vehicles. Ford Otosan also has a research and development division. The financial results for 2021 show that the company made exports of almost 6 billion dollars, according to the data on the company’s website. Specifically, the transactions concerning the Craiova factory were made in order to prepare a higher production of electric vehicles announced by Ford, in the last period.
The partnership between Ford Motor Company and Koç Holding AS is much broader. The two giants are preparing a huge volume of battery production for electric vehicles. “Koç Holding AS, Turkey’s largest industrial conglomerate, has signed an initial agreement to be part of the Ford Motor Co. joint venture. and SK Innovation Co. from South Korea to produce batteries for electric cars, according to the company’s public announcements.
The three partners in that project have undertaken to build a battery factory for electric cars near Ankara by 2025. The plant will have an annual capacity of between 30 and 45 Gwh, according to Bloomberg.
Ford Romania, business of 2.5 billion euros per year, in Craiova
In 2020, Ford achieved a turnover in Craiova of 12 billion lei, ie approximately 2.5 billion euros. Ford’s profit in Romania was about 15 million euros (77 million lei). By 2021, due to the intensification of Ford Puma production and the growing sales of this vehicle in European markets, it is estimated that the company’s business and profits will increase.
For the profit made until 2020 (inclusive) in Craiova, Ford had not paid any leu in the form of profit tax to the Romanian state, according to the data to which GdS had access, over time. GdS also asked the company if this time for the profit made for 2021 a profit tax was paid to the Romanian state. “We do not make statements on this subject,” Ford Romania officials said.
The Turks initially pay 575 million euros, on production facilities in Craiova in which Ford has invested over 1.5 billion euros
According to the announcement made by Ford on the Istanbul Stock Exchange (Istanbul Stock Exchange), where Koç Holding is listed, the transfer of ownership of the factory in Craiova will involve payments from the Turks in two installments. In the first phase, the Turks will pay Ford 575 million euros. It will then have to pay another 140 million euros, but this value is conditioned by production volumes.
At the same time, Ford has repeatedly announced that the total amounts invested in the factory in Craiova totaled over 1.5 billion euros (about $ 2 billion, according to information provided by Ford).
The question remains: why would Ford transfer to Ford Otosan production facilities in which more than 1.5 billion euros have been invested for a sum of 575 million euros?
In 2008, Ford took over the car factory from the Romanian state for a sum of 57 million euros. Immediately, the European Commission considered state aid and forced Ford to pay another 27 million euros to the Romanian state, for the car factory in Craiova. Since then, Ford has “pumped” technology into the Craiova plant, fundamentally modernizing the factory.
Who will supervise the car factory in Craiova?
Given that the transfer of ownership to Ford Otosan will be completed in the second half of 2022, who will be responsible for the car factory in Craiova? The Turks or the Americans from Ford? The current owner of the plant in Craiova confirms that he will “continue to participate” in the supervision of the factory.
“This transfer opens a new chapter of success in the history of Ford Otosan and offers the factories in Craiova to play a major role in the future of this joint venture, while supporting Ford’s solid plans for electrification and commercial vehicles. Given that Ford is represented on the Board of Directors of Ford Otosan through senior leaders and that Ford is involved in overseeing the business of this joint venture, the company will continue to oversee the business in Craiova, “said representatives. Ford.
What is happening to Ford suppliers on the industrial platform of Craiova?
During the period in which it acquired the car factory in Craiova, Ford relocated from various places in Europe various component suppliers. Respectively, production facilities were created by various suppliers, both in Dolj County and in Olt. The suppliers have been installed on the Craiova industrial platform for many years in order to be closer to Ford.
GdS asked Ford what will happen to the current suppliers, after the factory will be taken over by the Turks, respectively if more spare parts and sub-assemblies will be brought from Turkey, for the production of the cars from Craiova.
The fact that Ford Otosan will be the new owner of the factory in Craiova will help the transfer of “know-how”, through the vertical integration of electrical technologies and will have an extended and cost-effective effect on the network of suppliers. The current network of suppliers for the current products of the factory is not influenced by the ownership transfer process “, the representatives of Ford Romania specified for GdS.
What happens to the 6,200 employees in Craiova?
The employees of the Craiova plant are wondering what will happen to them in the future. The Ford plant in Craiova employs approximately 6,200 people. At the car factory, employees work in three shifts. Ford unionists say they were not notified of the transfer of the Craiova plant to Ford Otosan.
“The Ford Automobile Craiova union is surprised and shocked by the transfer of ownership of the Ford Craiova factory to its partner Ford Otosan Turkey. We do not know the transfer conditions so far. We will meet with the company’s management to get as much information as possible. We mention that the union was not informed and consulted, until the moment when Ford made the official announcement “, mentioned for GdS, Maria Manea, the president of the Ford Automobile Craiova Union.
Later, when asked if changes in the number of Ford employees were announced for the next period, the union leader mentioned that there will be no layoffs. “All the conditions of the Collective Labor Agreement are observed and there is no change in the work schedule in the next period. The third round is not given up, as it was circulated. No employee is fired. Everyone keeps their jobs “, said Maria Manea.
The current Collective Labor Agreement concluded between the union and the management of Ford Romania is valid until the end of 2023.
“A solid future is expected”
And Ford assures that it will maintain the number of employees.
“Ford Otosan does not intend to reduce the number of jobs at the factory in Craiova, but, on the contrary, the Ford Otosan team believes that future products and development and technology plans will provide great opportunities for existing operations in Craiova and for the team here. A solid future is expected in terms of workforce plans, as a result of the change of owner and in the context of new product launches “, Ford Romania representatives told GdS.
Asked what will happen to third-party employees if Ford decides to limit the production process, company officials said: “Ford’s policy has always been to adjust the volume of labor to the volume of production. We currently operate in three shifts and have no other information to share. ”
It is known that Ford and other automakers have adjusted their pandemic production volumes due to the semiconductor crisis. The company also mentioned that, “at the moment, the activity of the Ford factory in Craiova is not impacted by the politico-military situation in Ukraine”
–
