Ford Motor will close,
for the first time in ten years, one of its factories in Europe, located in Genk, Belgium, and will lay off 4,300 people, in order to reduce capacity and limit losses in Europe, which could exceed this year one billion dollars.
The 48-year-old plant in Genk will be closed by the end of 2014 and production of Mondeo, S-MAX and Galaxy will be moved to the Ford plant in Valencia, Spain, the U.S. manufacturer announced today, according to Bloomberg.
Closing the plant in Genk is “a stab in the back”, after the employees have accepted pay cuts, union leader Rohnny Champagne said after a meeting with Ford management.
European car market is severely affected by the sovereign debt crisis and sales could record the worst decline in the last 19 years, as a rapid recovery is not anticipated. Consulting company IHS Automotive forecasts that car sales in Europe will remain below pre-crisis levels until at least 2017.
The previous factory closed by Ford in Europe was Dagenham assembly plant in England in 2002 when 2,000 jobs were eliminated. Ford still has manufacturing facilities in the UK, Germany, France, Romania, Turkey and Russia.
Production of two models manufactured in Valencia could be transferred to Saarlouis in Germany, according to Ford. Genk plant closing is the most recent decision by a European manufacturer to eliminate excess production amid the decline of the market in the last five years.
PSA Peugeot Citroen plans to close a factory near Paris in 2014, while Opel, a division of General Motors, would stop production at its plant in Bochum, Germany in 2016. The company also closed in 2010 the factory in Antwerp, Belgium. Fiat also closed a factory in Sicily last year.
While the sovereign debt crisis extends beyond Italy, Spain and Portugal, the discounts offered by auto manufacturers are increasing. In Germany, the largest market in Europe, these discounts have come in September to 12.2% of the list price, the highest level in over two years.
Ford sales in Europe decreased by 12% this year, above the market decline of 7.2%. The factory in Genk was considered vulnerable because the models manufactured here were close to end of life.
Ford reported a second quarter pre-tax loss of $404 million in Europe, compared to a profit of $176 million a year ago.
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