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EU Checking Legality Of Volvo Subsidy

Regulators examining if Ford Motor Co. unit can receive $8.3 million from Belgium; money would likely cover training expenses that could not be subsidized by the state.

BRUSSELS, Belgium (AP) — European Union regulators said Wednesday they will examine if Ford Motor Co.'s Volvo car plant in Belgium can receive a euro6.02 million (US$8.3 million) subsidy from the country's Flemish region.
 
The European Commission said it believed that the state aid for Volvo Cars Gent would likely pay for training that the company would have carried out anyway to introduce a new production platform to make Ford and Jaguar models at the factory.
 
These were normal expenses that could not be subsidized by the state, it said, because a training grant would only be legal if it paid for extra training that the company would not usually finance itself.
 
Anything else could be seen as breaking EU state subsidy rules because it would give the company an unfair advantage over rivals.
 
Belgium, once a major site for car makers, has seen the auto sector shut down plants and shift to lower-wage locations in eastern and southern Europe.
 
Volvo's Ghent plant opened in 1965 and now employs 4,800 people making 240,000 Volvo cars in 2006.
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