THE monthly meeting of the board of directors of the European Investment Bank (EIB) in March began with the approval of a €80m loan to the Bulgarian subsidiary of a Turkish glass tableware manufacturer.
But it was another Turkish loan decision made that day among nearly €4 billion worth of lending that this week sparked uproar among Southampton Euro MPs and unions.
Meeting at the bank’s headquarters in Luxembourg – a striking glass-roofed building, its 28 directors and 12 alternate directors signed off up to €190m of funding for a Ford Transit factory in Turkey.
Among those in the room that day was the UK Treasury’s man on the board, Mike Glycopantis, and a Treasury-appointed expert, Timothy Stone.
Three months later, on June 27, an eightyear €100m (£80m) cheap loan was signed to upgrade the sprawling Ford Otosan factory in Koceali, specifically to make the next generation of Ford Transits.
The significance of the loan was put under the spotlight this week after Ford announced the closure of its Southampton factory, and confirmed that production of the Transit would be moved to Koceali.
UKIP leader Nigel Farage questioned why Chancellor George Osborne, a governor of the bank as one of the 27 countries that own it, allowed the loan to go head.
He said it appeared that the loan, raised on the back of UK taxpayer funding for the bank, was being used to export Southampton Ford jobs to Turkey, and demanded to know what analysis had taken place over likely UK job losses.
Other Euro MPs, including Lib Dem Catherine Bearder and Labour’s Peter Skinner, were also demanding answers from the bank and will be calling for the loan decision to be reviewed. Did the bank know about Ford’s restructuring plans when it signed off the loan?
But public holidays in Belgium and Luxembourg have thwarted their attempts to probe the loan decision.
The Treasury insists Mr Osborne played no part in the decision-making and says it is for the EIB to answer questions. The Treasury also pointed out that Ford UK benefited from up to £450m of EIB funding in 2010.
Ford insists the European loan is unrelated to the closure of the Southampton plant but admitted that its cost-cutting plans left two Transit factories unsustainable and that costs in Turkey are lower.
Industry experts are clear the writing has been on the wall for the Southampton’s Ford Transit factory since Koceali began churning out the iconic van in Turkey ten years ago, and has received over $1 billion of investment.
Today around 70 per cent of UK-sold Transit vans are imported from Turkey.
Koceali built 185,000 Transits last year compared with just over 28,000 made in Southampton and Ford says the plant will “comfortably absorb” Southampton’s work.
Ford insists that Ford Otosan is a separate joint venture business, which negotiates its own financing arrangements. Ford Motor Company has a 41 per cent stake in the business.