Layoff At Ford European Plant

BRUSSELS, Belgium October 1,2003; Raf Casert writing for the AP reported that Ford Motor Company cut further in its European work force on Wednesday, scrapping 3,000 jobs at its main Belgian plant in Genk and canceling promised investment because of the deteriorating car market.

In reaction, unions locked out deliveries of new supplies to the plant, forcing management to interrupt production. More extensive labor action was likely over the coming days.

"We'll hit Ford where it hurts," said union representative Ludo Copermans.

Prime Minister Guy Verhofstadt immediately convened a meeting with Ford management, one of the biggest private employers in Belgium. Almost 10,000 people work at the factory.

The authorities are angry because they had provided economic aid based on the promises Ford would maintain employment, said Regional Economics Minister Renaat Landuyt.

"We are talking about a multinational which is changing its tune, to put it mildly," he said.

Ford said it was forced to take action because of the depressed market.

"We need to adjust our business to the new realities in the European industry," said Ford of Europe President Lewis Booth. "We are taking steps to accelerate cost reductions."

Unions fear it will lead to a further scaling down of the plant in the eastern city, where Ford has already cut jobs over the past decade. Genk's economy is heavily dependent on the Ford plant following the decline of its coal mining industry, which shut down two decades ago.

In other cost-cutting moves, Ford's German division plans to trim about 1,700 jobs, or 6 percent of its work force, by year's end. Ford will also eliminate 1,700 contract workers, 1,300 vacant salaried positions and 50 salaried employees in North America in the coming month.

Under the Genk plan, the Detroit-based automaker said it would cancel planned investment of some euro900 million ($1.04 billion) in a line to produce the new Ford Focus. Now, the Focus will be produced in two instead of three European plants.

Ford said it will also move from three to two production shifts for its Mondeo model at Genk.

"With lower industry outlooks, a larger number of competitors and escalating marketing costs, we must concentrate on maximizing out product lineup while minimizing our spending," Booth said.

Big losses in Europe have dragged down the earnings of the U.S. car maker.

Ford of Europe's pretax loss ballooned to US$525 million in the second quarter, dragging overall quarterly profit at the world's No. 2 carmaker down 27 percent to US$417 million.

The loss in Europe compared to a deficit of just US$18 million in the second-quarter of 2002. The European losses are blamed on lower prices, an unfavorable vehicle mix and falling sales volume.

In the increasingly competitively European car market, Ford is losing out predominantly to Japanese and Korean competitors, but is also underperforming against its chief rival General Motors Corp., which has managed a slight increase in western European market share.

Ford is in the midst of an aggressive restructuring plan launched in January 2002 that includes a goal of improving profits by US$9 billion by mid-decade.

Ford lost US$6.4 billion in 2001 and 2002 but earned US$1.3 billion in the first half of 2003.