MADRID -- Ford said it will boost output at its plant in Valencia, Spain, by 40 percent to about 400,000 units this year as it adds new models.
Ford has moved production of its Mondeo midsize car, along with the Galaxy and S-Max large minivans, to Valencia from its plant in Genk, Belgium. Ford closed Genk in December to reduce excess capacity and help to return its European business to profit.
Ford said in a statement on Thursday that it has completed the final part of a 2.3 billion euro ($2.6 billion) expansion of its operations in Spain, in what it called the biggest ever investment in the country's auto industry. The investment consists of an initial 1.1 billion euros announced in 2011, followed by another 1.2 billion euros since 2013.
Ford is increasing production in Spain as the country undertakes reforms to restore economic stability, including easing the conditions for firing and hiring.
Ford CEO Mark Fields and Spanish Prime Minister Mariano Rajoy visited the Valencia plant on Thursday to mark the investment.
"This is one of the most modern and flexible automobile plants worldwide," Fields said. "The economic, financial and labor reforms have helped to improve the economic growth."
Rajoy said the auto industry had played a key part in the recuperation of the Spanish economy.
The European Commission has sharply increased its forecasts for Spanish economic growth this year.
While Ford has been losing money in Europe since 2011, the company's loss in the region narrowed in the fourth quarter to $443 million. The automaker said its sales in Europe rose 7.3 percent last year, outpacing the overall market, as the region slowly recovers from a deep recession.
"Our business grew in Europe last year; our market share was up," Fields told Bloomberg. "We do expect the industry to grow a bit more this year."
Ford last month began sales of the new-generation Mondeo built in Valencia. Production of the latest Galaxy and S-Max models will begin later this year. By the end of the year, the factory will build six models. The Tourneo and Transit Connect vans, and Kuga SUV, are already produced in the factory
Ford's investment included a new body shop and paint shop that will help raise daily production to 2,000 vehicles. The automaker has capacity to increase future production to 450,000 a year. That will make Valencia one of the two largest assembly operations in Ford's global manufacturing system, along with the automaker's factory in Chongqing, China.
Ford is also creating a special department at the Valencia factory to ensure high quality levels for its new upscale Vignale trim line. An upscale Vignale Mondeo will launch in August. Ford also plans to sell a Vignale version of the S-Max.
New assembly line processes make Valencia one of Ford's most-efficient facilities, enabling it to build more models and derivatives than any other Ford plant in Europe, the carmaker said.
Tony Adams, Valencia’s operations manager, said in the statement that the addition of the Mondeo, S-Max and Galaxy means the plant now has to manage 10,000 parts, up from 7,000, "requiring some fresh and innovative solutions.”
Ford said the plant now employs 8,000 people, up from 5,000 in 2013. Supplier operations supporting production have also added 1,500 jobs in the last two years.
Spain's car industry, including parts manufacturers, created 26,800 jobs in 2014, according to Spanish car producers' association ANFAC.
With Spanish unemployment at 24 percent, unions have accepted flexible work practices and salary freezes to protect jobs.
Reuters and Bloomberg contributed to this report