That'll Hurt: Ford Thought To Close Belgium Plant. Price Tag $1.4 Billion

Bertel Schmitt
by Bertel Schmitt

Union representatives at Ford’s Genk plant in Belgium have been summoned to an emergency meeting on early Wednesday morning. No reason has been given, but unions expect the worst, says Reuters: The closure of Ford’s Genk factory.

“No one is allowed to tell us anything,” an official of the ABVV Metaal union told Reuters. “We’re assuming it will be a very serious announcement.” Ford declines to comment.

Rumors of a plant closure had been swirlin g since Ford doubled its European loss forecast to $1 billion in July and said that Ford Europe needs to “decrease our production to match real demand”. Ford’s EU sales were down 14.9 percent in September and 12.6 percent for the year.

The plant employs 4,300 workers which make the Mondeo, the Galaxy and the S-MAX minivans. All are at the end of their life cycle.

Ford will present third-quarter financial results on Oct. 30. UBS analyst Colin Langan said that Ford’s European factories are running at 52 percent of capacity, and predicted that “Ford is most likely to close its assembly plant in Genk,” due to the plant’s “consistently low utilization level”.

Contrary to conventional wisdom, it is fairly easy to close a plant in Europe. However, it is obscenely expensive. Workers must receive generous severance payments. Langan figures that closing the Belgian factory would cost some $1.4 billion, or $332,000 per worker, against annual savings of $730 million.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Gentle Ted Gentle Ted on Oct 22, 2012

    I note that a recent post from ConsumerReports Magazine in that they have downrated the Ford Edge here in North America, this won't help there sales here either. Europe is another matter entirely!

  • Cammy Corrigan Cammy Corrigan on Oct 22, 2012

    Hmmmm....something doesn't make sense here. A few weeks ago, Ford gave aasurances to the Belgian union that the new Aston Mar.....er Mondeo would be built in Belgium. That's why there were reports of the unions being more optimistic of the future of Genk. Now, Ford may close the factory down? Either this meeting is about something else or Ford are going back on their word. If it is the latter, then it has an eerie parallel to when Ford shut car manufacturing down in Dagenham after promising the UK unions that they would get a contract to build the next Fiesta... http://www.inautonews.com/ford-prepares-genk-plant-for-the-new-mondeo

  • Acuraandy Acuraandy on Oct 22, 2012

    In 2006 Ford announced officially (despite rumors for the preceeding 5 years) it would be shuttering the Twin Cities Assembly Plant in St. Paul, MN, the plant that built the much antiquated Ford Ranger. It didn't actually close until around Christmas 2011. These things take time...

    • Tresmonos Tresmonos on Oct 22, 2012

      When they announced Twin Cities, STAP, Wixom, Atlanta, Edison (earlier), St. Thomas (announced later) and Norfolk, they did it exactly to capacity and end of platform life. The Ranger limped along as there was already minimal product development that was underway that kept the platform somewhat relevant. Genk will see the same fate as the end of the platform life plants did. No reinvestment, and no VIN roll. I guess I'm trying to illustrate some plants have been shuttered within a year's time the plant had a sister assembly plant running the same product.

  • Chicagoland Chicagoland on Oct 23, 2012

    "...what would it cost to reactivate the plant?" Flexible manufacturing can add capacity to other sites. The days of 'dedicated car platform' factories are over.

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