Saturday, November 3, 2012

THE FALL OF THE AUTOMOTIVE INDUSTRY IN BELGIUM


Workers at Ford Genk after having received the message that the plant will be closed.

Once again, a car plant in Belgium will be closed. This time it's the Ford plant in Genk, where 4500 workers will lose their jobs. Most probably, the same amount of jobs will be lost at the suppliers. In total, approximately ten thousand people are threatened with unemployment. Since 1997 it is the fourth major car brand that closes its plant in Belgium. In that year, workers, trade unions and politicians were surprised by the closure of the Renault Factory. More than 3000 workers lost their jobs. The decision to shut down was taken in France. Belgium had no other options than to accept it.

The result of this abrupt closure was the creation of ‘the Renault law’ that tightened the rules on collective redundancies. The Work’s Council should be informed extensively on plans to close the factory. Thereafter, the Work’s Council can forward questions and only after this the company can submit a plan for collective redundancies. The law did not prevent the closure of the Renault factory and will have no impact on the proposed closure of the Ford plants, it only helps unions and workers to get a more or less fair financial compensation for the loss of jobs.

In 2006, in Germany the decision was made that the Volkswagen plant in Brussels would be heavily restructured. Of the more than 5000 workers about 4000 lost their jobs while as many jobs were lost in subcontracting. The production of the Volkswagen Golf was moved to Germany. Thanks to the German car manufacturer Audi 1000 jobs could be saved by the production of a small car in the same plant. According to the newspapers the paid compensation for dismissal was "historically high".  Approximately 900 workers received early retirement payment with help of the government. AUDI demanded a 20% saving on the costs of production for which the remaining workers primarily had to accept a longer working week (38 hours instead of 35).

In 2010, the Opel plant of General Motors in Antwerp was closed. This meant a loss of 2600 jobs plus probably as many jobs at suppliers. According to the GM management sales of cars had dropped since the start of the credit crisis in 2008. Only the GM plant in Belgium was closed, not the ones in Germany, England, Poland and Spain. It is supposed that to maintain employment the governments of these countries had given financial support to GM. According to the unions, the crisis was also used to transfer production capacity to a lower wage country like South Korea.

The argument of overcapacity in car production and to high wages is now also being used by the management of Ford for the closure of the plant in Genk. Specialists confirm that there exists indeed a structural overcapacity in the production of cars in Europe but Ford itself is not suffering from this problem. The company suffers nowadays from cyclical overcapacity in Europe caused by the credit crisis. Car sales have been fallen by one quarter. But Ford as a multinational is still making profit in the US because it has been restructuring on time and unlike other car manufacturers such as Renault, has made flexible the production of many car components by way of outsourcing to suppliers.



Ford has announced that part of its car production will move to Valencia, Spain where wages are lower than in Belgium. The strong unions in Belgium are preparing for hard bargaining on the coming collective redundancies in 2014. A maximum compensation of 77,000 euros per worker, depending on the number of years that he or she has worked, has been mentioned. However, the compensation payment will not compensate the loss of thousands of jobs, especially not if we take in consideration the loss of jobs at suppliers.

The Belgium experience shows that unions (including European and international unions), national politics and even the European Union are rather helpless when they are confronted with the closure of a plant belonging to a multinational with the size like Ford. Besides the closure of plants of Renault (France)  and Volkswagen (Germany) in the heart of Belgium has made clear that the country of origin supports the opportunistic move of the multinational to save jobs in their own country.

In general one can conclude that large multinationals operate on a global market and that there is no national government or in this case the  European Union that can change decisions taken at the board of such a multinational. Besides, international unions are confronted with different loyalties of their member unions. Which union would support the closing of a plant in its own country because of solidarity with workers of a plant in another country especially when unemployment is on a high level?

The last 15 years the Flemish part of Belgium has lost tens of thousands jobs in the automotive industry. The country has to design a new industrial policy. In which sectors new jobs can be created, who wants to invest money in such sectors, what level of education is needed etc.?  These are long-term issues that politicians, employers and trade unions have to prepare for today or was it yesterday?

2 comments:

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