Staff Writer - CheersandGears.com
October 26, 2012
This week hasn’t been good for Ford’s factory workers in Europe. The blue oval announced the closure of three plants; two in United Kingdom and one in Belgium.
We’ll start with Belgium. On Wednesday, Ford announced the closure of the Genk Assembly Plant in Belgium. The Genk Assembly builds the current Mondeo midsize, and the S-MAX and Galaxy MPVs. The closure will affect about 4,300 jobs when it happens in 2014.
"This (closure) wasn't the plan. Initially we had committed to build the next-generation Mondeo and S-Max and Galaxy at this plant, but the contract has a clause for significant decline in market conditions," says Ford of Europe spokesman Mark Truby to USA Today.
One of the reasons Genk will be closed down is the lack of capacity. Ford Europe Chairman Stephen Odell told Reuters that the plant was running under 50% capacity. Production will move to a plant in Valencia, Spain.
"After the announcement there were some rough scenes. There was some pushing and shoving but we managed to calm it down. It was aimed at the management but they left quickly. It was also among each other as people were very angry and frustrated," said Luc Prenen, the head of the ACV union after the announcement was read.
The closure also affects the production of the next-generation Mondeo (i.e. the new Fusion). According to What Car?, production has been delayed till the end of 2014.
Next: That’s not all the closures though.
Yesterday Ford announced two more closures, both in the U.K.
- Transit van plant in Southampton
- Dagenham stamping plant
This will cause another 1,400 jobs to disappear.
So why is Ford shuttering plants? To conserve as much cash as they can. Losses at Ford’s European branch are estimated to be around $1 to 1.5 billion. Ford says the closure Genk alone will save around $300 to 500 million. Analysts say though the closure could cost around a billion.
The closure will also cut down on the overcapacity that European automakers are currently dealing with. At the moment, Europe has the capacity to build 22 million vehicles. Last year, about 18 million new vehicles were sold. This year, analysts are forecasting about 14 million vehicles.
Source: Reuters, 2, USA Today, What Car?, The Detroit News, 2William Maley is a staff writer for Cheers & Gears. He can be reached at email@example.com or you can follow him on twitter at @realmudmonster.