Labor unions said that Ford Motor Co. will shut down its assembly plant in, Genk, Belgium, and will transfer the plant’s production to Valencia, Spain. Union officials said that Ford will close a 48-year-old Genk plant in 2014 to get rid of surplus capacity in Europe's declining auto market. Luc Prenen, a representative for Belgium's ACV union, said that Ford unveiled these plans to labor representatives during a meeting at the plant.
There are about 4,300 people employed in the eastern Belgium plant, which produces the Mondeo mid-sized car and Galaxy and S-Max minivans. These three models are nearing the end of their current life cycles. Ford aims to cut losses in Europe. Ford estimates that its losses will go up to higher than $1 billion this year, with the sovereign-debt crisis expected to result to the largest annual decline in auto sales in the market in 19 years.
Industry association ACEA said that Ford experienced a 12.6% decrease in sales in the EU during the first nine months of the year as the total market has dropped 7.6%. Last July, Ford said that something had to be done to lower its output to match the actual demand. Ford said that just 68% of Genk's manufacturing capacity was used in 2011, lower than the 80% threshold, which is generally thought to be profitable.
In the second quarter, Ford posted a pretax loss of $404 million in Europe. A year ago, it had a $176 million profit. In a Sept. 17 report, UBS research analyst Colin Langan estimated that closing the Genk plant may mean savings of about $500 million.
Unions said that the Genk plant has been running on a four-day week for most of 2012, with just 15 more production days planned for what remains of this year and none in December. Workers started to block the gates upon hearing news that it may possibly shut down. Last month, unions said that they were more hopeful about Genk's future after Ford scheduled the start of the Mondeo production there for October 2013.