Ford Motor Co. announced on Wednesday it planned to close a car plant in eastern Belgium one of its main European factories by the end of 2014, a move that would result in 4,500 direct job losses and 5,000 more among subcontractors.
Exactly half a century after construction on the Genk plant started, Ford told a management council there that production was winding down since slumping European sales has forced a restructuring of its plants.
“This is taking us by surprise and is an extremely bitter pill,” Christian Democrat union representative Johan Lamers said.
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Ford has been under pressure in Europe due to the region’s dwindling demand for its models and the overall slide of car sales on the continent due to the debt crisis.
The company expects to lose more than $1 billion this year in Europe, where it gets a quarter of its sales. Analysts say Ford has more factory capacity than it needs.
Even though the Ford plans still need to go through a social consultation phase with unions to see if alternatives are available, regional authorities in northern Belgium’s Flanders are already looking how to recover money from the €57 million ($74.13 million) it committed in 2010 to keep Ford rooted there for years to come.
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“It is incomprehensible and a nightmare for those people,” said Flanders minister president Kris Peeters.
“In October 2010, we negotiated and signed a deal worth many millions. And now they said ‘OK, let’s close Genk’,” Mr Peeters said.
Prime Minister Elio Di Rupo said the national government would also do its utmost to salvage something for the thousands of workers.
“To try and give a solution a chance, all authorities have to work together in a constructive way,” he said after meeting with Ford management.
Even if major plant closures have to go through elaborate social negotiations, employers usually can push through the essence of their plans
The plant in Genk makes the midsize Mondeo, the S-MAX minivan and the Galaxy car. Ford said it plans to move the production of all three lines to Valencia, Spain.
“The proposed restructuring of our European manufacturing operations is a fundamental part of our plan to strengthen Ford’s business in Europe,” CEO Ford of Europe Stephen Odell said in a statement.
Ford has been struggling in Europe.
Figures from Acea, the European carmakers’ association, show European mark sales have dropped 10.8 percent on a year-by-year basis in September. Ford’s drop in sales was even bigger at 14.9 per cent.
The announcement came barely a month after Ford had given reassurances about production at the Genk plant, Lamers said.
Ford Genk represents more than 30 percent of the car production in Belgium.
Workers took the announcement early Wednesday with lots of tears but relative calm. A bonfire was set up at the gate of the plant but there was little union action since the factory was in the middle of a three-week layoff because of slack demand.
Car workers looked into an uncertain future.
“Well, where are we going to find a job? It is very difficult in this time, in this crisis,” said Ford employee Gustav Janssen.