Ford closes Belgian plant as Europe’s auto crisis spreads

Ford workers react after the European Ford management announced it would close the Ford plant in Genk, Belgium on Wednesday Oct. 24, 2012. A union leader says Ford has decided to close its factory in Genk, Belgium, at the end of 2014 in a move that will result in 4,500 direct job losses and 5,000 more among subcontractors. (AP Photo/Geert Vanden Wijngaert)

GENK, Belgium—Belgium was in shock Wednesday after US auto giant Ford announced plans to close its Genk plant, threatening 4,300 jobs as slumping demand across Europe leaves companies with too much capacity.

Ford Genk is the leading employer in the northeast Flemish region of Limbourg near the Dutch border, and staff raged or wept as news of the imminent closure came at an extraordinary works committee meeting.

“It’s a nightmare, a catastrophe for Genk and for the region,” said town mayor Wim Dries as TV and radio networks headlined it “a bitter pill” and “sharp blow” for Belgium and for Limbourg, where Ford provided work for some 10,000 people in the broader economy.

“We feel betrayed, we had a contract, a work contract till 2020 and now everything’s over,” said plant employee Jean-Francois Muto.

Ford Europe said in a statement issued in Frankfurt that the planned closure by the end of 2014 was part of an overall shake-up of its European operations in the face of falling demand – currently at a 20-year low.

The plan will “help to address manufacturing overcapacity stemming from a more-than-20-percent drop in total industry vehicle demand in western Europe since 2007,” Ford explained.

Saying he was “stunned,” Prime Minister Elio Di Rupo called for efforts “to find new economic activities for the region.”

Ford said the assembly of its Mondeo, S-Max and Galaxy models would be transferred from Genk to Valencia in Spain.

Because the current Mondeo was assembled in Genk, trade unions had thought the plant had won a respite of several years when Ford last month announced the launch of production of the new Mondeo in October 2013.

Ford’s Europe managers met Di Rupo and the head of the northern Flanders government Kris Peeters.

Peeters said the loss of thousands of jobs in the once thriving coal mining Limbourg area was “a tragedy.”

Genk’s closure marks a new low for a once hugely important industry in Belgium and follows the decision by Opel, the European arm of US giant General Motors, to shutter its plant in the northern city of Antwerp two years ago.

The Flemish business leader’s association Volka called on the government to reduce the price of labour to make the country competitive again.

“To compete with foreign competitors, labour costs paid by companies must be drastically cut,” said Volka official Jo Libeer.

“We understand the impact this potential action would have on our workforce in Genk, their families, our suppliers and the local communities,” Ford Europe Chief Executive Stephen Odell said.

“We fully recognize and accept our social responsibilities in this difficult situation and, if the restructuring plan is confirmed, we will ensure that we put in place measures and support to lessen the impact for all employees affected,” he said.

Pending further study, Ford may decide to move production of the C-MAX and Grand C-MAX compact multi-purpose vehicles from Valencia to Saarlouis, Germany, in 2014, where the car industry is faring better than in Belgium or France.