Ford to pay $750 million severance to workers at Belgium plant
To stem financial losses in Europe, Ford announced in late October that it would close three European plants, including a Genk, Belgium, factory, pictured.
Photo credit: BLOOMBERG
DETROIT (Reuters) -- Hourly workers at Ford Motor Co's plant in Genk, Belgium, will get $750 million in severance as part of a deal that allows the automaker to close that factory by the end of 2014, the company said in a regulatory filing.
Ford and the 4,000 hourly workers at the plant reached a deal last week that allows the automaker to go through with its plan to close the factory, which now builds the Mondeo sedan, and the S-Max and Galaxy minivans.
Negotiations over severance pay between Ford and the plant's 300 salaried workers are under way. The $750 million cash payout comes to an average of $187,500 per hourly worker.
The per-worker severance payment is less than what General Motors Co spent in 2010 to close its factory in Antwerp, Belgium. GM paid about $527 million to the plant's 2,600 workers for an average payout of $202,700, GM filings show.
Ford announced in late October that it would be closing the Genk plant as well as two others in Britain, to stem its losses in Europe where an economic downturn has hurt demand for new cars.
Industry figures released on Tuesday showed the European car market logged its worst February of sales in at least 23 years.
Ford and GM both recorded a roughly $1.8 billion loss in Europe in 2012. Ford expects to lose another $2 billion in the region this year. Chief Executive Alan Mulally has said Ford will not rule out further capacity cuts and other actions if the situation worsens in Europe.
18% capacity cut
In all, Ford plans to cut 18 percent of its capacity in Europe. Ford will transfer the work now being done in Genk to its plant in Valencia, Spain.
Ford will log the severance payments as a special item, for accounting purposes. The expenses will be spread out over the next several quarters depending on the timing of the employees' departure, Ford said in its filing on Tuesday.Contact Automotive News