March 11, 2008
Brussels, Belgium – The European Commission (EC) has concluded that a revised grant to support employee training at Volvo Cars Gent is compatible with EC Treaty state aid rules, following an in-depth investigation over concerns that part of the aid might finance activities which the company would have carried out anyway.
In May 2007, the Flemish Regional Government announced a grant of €6.02 million for a training program at Volvo Cars Gent, part of the Ford Motor Company. The plant employs 4,800 workers and produced 240,000 Volvo cars in 2006. The company had announced a new product platform that will become standard for midsize vehicles, and will also be used for Ford and Jaguar vehicles. Part of the training program related directly to this investment.
The Commission opened an in-depth investigation in September 2007, expressing doubts about the compatibility of the grants with the European Union’s rules on state aid for training. To introduce a new production platform, a plant’s workforce must be trained in the new techniques and work methods; the Commission therefore questioned whether the aid would lead to Volvo incurring additional training activities that would qualify for training aid, or if the aid would simply subsidize costs that the company would have had to incur in any event in the course of its daily operations.
Belgium acknowledged that part of the training would be carried out even without aid, but submitted that part of the program would go beyond what was necessary to operate the new platform and would not be otherwise carried out without the aid. Consequently, Belgium reduced the project’s budget to €3.54 million to support only the latter training. With the endorsement from the European Commission, the Flemish Region will authorize the training aid to Volvo Cars Gent.