Production of the Grand C-Max could eventually wind up in Germany, while the Mondeo will move to Spain.
Ford Motor Co. will close its under-utilized assembly plant in Genk, Belgium, the maker announced following a meeting with union leaders at the doomed facility.
The move, which confirms a report on TheDetroitBureau.com yesterday, will result in the loss of as many as 4,300 jobs – but should save significant money for Ford which has warned it could lose $1 billion or more on its European operations this year.
The announcement is part of a broader restructuring by Ford of Europe that may involve the closure of a second factory. And it could trigger a domino effect among European car manufacturers who have been struggling under the combined weight of a struggling economy, plunging sales and excess capacity that some analysts say is the equivalent of at least eight European assembly plants.
“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,” said Ford Europe Chairman Stephen Odell in a statement.
Reports from Europe indicate Ford management plans to meet with union leaders in Britain on Thursday and could announce a second plant closure, this one impacting the Southampton assembly line that currently produces the maker’s big Transit van.
It is not clear what would happen if the UK facility closes but Ford plans to transfer production of its Mondeo – the European equivalent of the Ford Fusion — from the Genk plant to an assembly operation in Spain. Its Spanish facility is considered one of the most cost-effective of Ford’s operations in Western Europe. The Belgian plant was arguably Ford’s highest-cost factory.
Another beneficiary of the latest shake-up is the Ford plant in Saarlouis, Germany, which may pick up production of the maker’s C-Max and Grand C-Max models currently produced in Belgium. (The bigger of those two people-movers is going on sale as the Ford C-Max in the U.S. for 2013.)
Belgium’s loss is clearly a victory for Spain, where unemployment is currently running above 26%. The Valencia plant employs 3,485 workers and could gain jobs as it picks up more production.
Union leaders said the Wednesday morning meeting in Genk escalated in a shoving and shouting match, though it eventually calmed down. The country has suffered a sharp reduction in automotive production in recent years, losing both Opel and Renault facilities.
Ford’s decision to cut capacity reflects the maker’s declining sales and market share. It has seen a steep decline outpacing the overall downward spiral of the European Union car market this year.
But over-capacity is an endemic industry problem, senior executives like Fiat/Chrysler CEO Sergio Marchionne has warned. Until now, however, the industry has been engaged in a high-stakes game of chicken, everyone waiting for the other guy to blink, said Marchionne, warning that industry-wide action was necessary to halt losses that will amount to billions of dollars this year.
PSA Peugeot Citroen, which today received word of a French government bailout, also plans to close an assembly plant. So does General Motors’ troubled Opel subsidiary. But whether other manufacturers will follow remains to be seen.
(For more on the PSA Peugeot Citroen bailout, Click Here.)