Hourly workers at Ford’s Genk plant in Belgium will receive $750 million in severance pay as part of an agreement that allows the carmaker to shut down the site by the end of next year. Last week, Ford and the plant’s 4,000 hourly workers reached an agreement that allows the carmaker to carry out its closure plans for the plant, which currently produces the Mondeo sedan.
On average, a single hourly worker at the Genk plant will receive around $187,500 as severance pay. Ford said in a regulatory filing that talks over severance between the carmaker and the plant’s 300 salaried workers have already started. Ford is expected to record the severance costs as a special item in its financial statement.
Ford is expecting to post around $2 billion in losses this year in Europe, where the current economic crisis has led consumers to avoid making expensive purchases like new cars. Europe saw its worst February in terms of car sales this year, according to industry figures. Ford announced in October 2012 that it would shut down three plants in Europe, including the Genk site, to reduce its losses in the region.
Overall, Ford plans to cut its capacity in Europe by 18 percent. Ford’s plans met various oppositions, including angry protests in Cologne, Germany, where the carmaker has its European base.
In November 2012, around 170 protesters burned tires and threw fireworks at police officers outside a Ford plant in Cologne, Germany. Ford chief executive Alan Mulally and other executives have said that they will not rule out more capacity reductions and other actions to minimize costs if the situation comes to worse in Europe.