BMW to get less aid than expected for plant

FRANKFURT, Dec 9, 2002; Reuters reported that BMW AG will receive less help from the German government than it anticipated to build a new 1.3-billion-euro factory in the east German town of Leipzig, a magazine said on Monday.

BMW had hoped to receive around 416 million euros in state aid for the plant from the German government, which gives generous subsidies to companies investing in the struggling eastern part of the country.

EU Competition Commissioner Mario Monti had decided on competition grounds that BMW could receive no more than 363 million euros in aid, Focus magazine said in an unsourced report. It said the Commission would vote on the case this week.

"The decision will be made on Wednesday as far as we know, and we expect that the conclusion will be positive. We can't say any more until the final decision is made," a spokesman for Munich-based BMW said.

BMW intends to build some of its 3-series models and employ around 5,000 people in the medium-term at the plant in the eastern state of Saxony, which has an unemployment rate of around 20 percent.

Funded from both federal and state coffers, Germany has paid about 70 billion euros a year to the east in state investment and social benefits transfers since unification in 1990.

Both BMW and sportscar maker Porsche, which opened a futuristic 127-million-euro factory in Leipzig in August, have said the availability of qualified, yet flexible and cheap staff, are also one of the region's attractions.

Mass producer Volkswagen recently opened a showpiece factory in the state capital Dresden and also has two other sites in Saxony.