Ford has announced plans to close its Genk plant in Belgium by the end of 2014, affecting 4,300 workers. Ford’s current labour agreement guarantees production at the Genk plant of new mid-sized vehicles through the end of 2014. The closure is part of a new proposal to restructure the company’s Europe manufacturing operations in response to dwindling sales in the region. Analysts have calculated that closing the Belgian factory could generate annual savings of US$730m.
The OEM is currently consulting with employee representatives on the proposed Genk closure. If the plan is confirmed, Ford will transfer the next-generation Ford Mondeo, S-Max and Galaxy (all currently built at Genk) to its Valencia plant in Spain. Production of the C-Max and Grand C-Max would move from Valencia to the Saarlouis plant in Germany, starting in 2014.
Vehicle sales in western Europe have been slowing for months, reaching a near 20-year low recently. Little hope is expected in the near term, with next-year’s market forecast to remain flat or fall further. Ford expects to report a loss in Europe this year of US$1bn and has spoken of the need to adjust output to demand. Its capacity utilization in the region has been at around 60% in recent months. To date, Ford has relied on measures such as short-time working and reducing expenditure on contract agency workers and purchased services to help address current challenges in the region.
“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,” explained Ford of Europe Chief Executive Stephen Odell. “We understand the impact this potential action would have on our workforce in Genk, their families, our suppliers and the local communities. We fully recognise 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.”
Belgian unions have previously warned that the impact of Genk’s closure, due to the number and proximity of suppliers to the plant, could be much more severe than GM’s closure of its Antwerp site in the country.
Ford has said that it will provide additional details of the general European restructuring plan during an analyst and media call on 25 October.
