(Bloomberg) -- General Motors Co.'s 1,300 workers in Antwerp, Belgium, are fighting for their jobs, hoping for a white knight to rescue the factory from closure.
"We're trying to find an investor by the end of this month,” said Luc van Grinsven, a union official at the 86-year-old plant, which makes an Astra model for GM's Opel unit. “If we don't, the factory will close at the end of the year.”
Antwerp is an anomaly. Not a single European automobile plant closed during the recession, while 18 assembly factories have been shuttered in the U.S. since 2008.
European governments prevented the biggest automakers from firing workers and used subsidies to prop up sales. Now that most of the incentives have expired, executives must find ways to cope with a slump in demand as they gather at the Paris auto show this week.
“In Europe, the relationship between governments and major manufacturers goes hand in hand,” said Francisco Carvalho, a London-based analyst at IHS Automotive. “Closing plants will upset the governments. The U.S. now has much more sane utilization rates than Europe in the medium term.”
European capacity use will probably be surpassed by the United States this year for the first time since 2006, IHS Automotive estimates. North American plants will on average use 72 percent of capacity, up from 51 percent in 2009. The average for Europe may climb to 68 percent, boosted by demand from China. An automaker typically needs at least 80 percent utilization for a plant to be profitable, the researcher says.
With GM and Chrysler Group leading the U.S. plant closures as part of their bankruptcy reorganizations last year, improved usage is helping them post profits or pare losses. GM, the biggest U.S. carmaker, earned $2.4 billion in the first half. Chrysler, run by Fiat, reduced its losses to $369 million.
“Their cost base, relative to western Europeans and a lot of companies around the world, is going to be lower and they should be very cost competitive,” said Ron Harbour, a partner at Oliver Wyman. “If they can do everything they need to do on the product side, they could be dramatically more competitive than western European plants.”
At 62.8 percent Renault SA, the maker of the Clio compact and Megane family car, has the worst capacity use rate among Europe's volume carmakers, said Carvalho. Fiat S.p.A., Italy's largest carmaker, is at 64.8 percent and PSA/Peugeot-Citroen SA, France's biggest, is at 67.4 percent.
Europe car sales fall
European capacity this year, including Russia where carmakers have built plants recently, is at about 27.5 million cars, IHS's Carvalho said. By contrast, Ford Motor Co. said last month that Europe's new car sales may fall to as low as 14.5 million vehicles this year from 15.9 million in 2009.
The European usage rate will likely drop in the second half with carmakers forecasting a sales decline in the region as government-funded scrapping programs end.