Published October 24, 2012
GENK – Ford Motor Co will close a factory employing 4,300 workers in the Belgian town of Genk by the end of 2014, shifting production to Valencia, Spain, as the U.S. automaker tries to stem European losses.
Consumer budgets have tightened due to unemployment and government austerity, sparking a slump in the region's car market. Automakers are battling for survival, with plans to cut costs and production capacity to match falling demand.
"The proposed restructuring of our European manufacturing operations is a fundamental part of our plan to strengthen Ford's business in Europe and to return to profitable growth," Ford Europe Chairman Stephen Odell said in a statement.
The plant makes the Mondeo mid-size car and Galaxy and S-MAX minivans, but all three models are nearing the end of their current life cycles.
Ford said production of the new Mondeo, S-MAX and Galaxy models will be moved to Valencia in Spain with the loss of 4,300 jobs in Belgium by the end of the cycle in 2014.
Ford's decision to close Genk comes after General Motors shut its Antwerp plant in 2010.
The shift to Spain also echoes GM's May decision to produce the next generation of its Astra compact in Britain, after workers agreed a pay deal, leaving its plant in Bochum, Germany in danger of closure.
Several hundred Ford workers gathered outside the gates of the plant, as local managers met staff representatives on Wednesday morning.
"It's incredible," said one of the workers, Peter Aerts. "Just last month I got an invitation to celebrate 25 years working here."
Another employee at the plant, Rudi Schepens, said: "It's difficult because most people here are over 40. They say that people will find it hard because the government has to make cuts. That's nothing compared to what we are facing.
"First they gave us hope, now it's all gone."
Union leader Luc Prenen said European-level managers did not attend the meeting, leaving local bosses to read a statement.
"After the announcement there were some rough scenes. There was some pushing and shoving but we managed to calm it down," said Prenen, the head of the ACV union.
"It was aimed at the management but they left quickly. It was also among each other as people were very angry and frustrated."
Ford Europe managers, including Odell, are scheduled to meet Belgian Prime Minister Elio di Rupo and Employment Minister Monica De Coninck at 1 p.m. (1100 GMT).
The executives are also due to meet members of the government of the Dutch-speaking region of Flanders, where the plant is located, at noon (1000 GMT).
In September, European new car registrations shrank at the fastest pace in the past 12 months, leaving nearly all major brands nursing double-digit declines.
French carmaker PSA Peugeot Citroen, which in July announced plans to cut 8,000 more jobs and close a plant near Paris, said on Wednesday third-quarter sales fell 3.9 percent.
Ford's Genk plant, which opened in 1964, has operated on a four-day week for much of 2012, unions say, with only 15 more production days planned this year, none of them in December.
In a recent research note, New York-based UBS analyst Colin Langan predicted that Ford would move to close a major plant in Europe, where its factories are running at 52 percent of maximum output on average this year, with Genk the likely candidate.
Closing the Genk factory would cost an estimated $1.1 billion and generate annual savings of $730 million, Langan added.
Ford's announcement last month that it would produce the new Mondeo in Genk from next year briefly raised hopes for the plant's future, although sources later warned that the tentative start date was not a reprieve and Ford was prepared to assemble the model elsewhere.
Workers began blocking the gates when reports of the possible closure emerged on Monday.
Ford, which will present third-quarter results on October 30, doubled its European loss forecast for 2012 to $1 billion in July and said action was needed to "decrease our production to match real demand".
Ford employs 3,485 workers at its assembly plant in Valencia, where it produces the C-MAX 5-door and 7-door models, data on its website shows. It also has an engine plant in Valencia employing 470.
It will start producing the Kuga model there next month and has been expanding facilities to be able to start assembling the Transit Connect model from next year.
Ford has about 6,000 employees overall in Spain.
Valencia's regional government said no tax incentives had been offered in the deal.
(Additional Reporting by Nigel Davies in Madrid; Writing by Philip Blenkinsop and Helen Massy-Beresford; Editing by Alastair Macdonald and Anna Willard)