On Wednesday October 24th, the employees of the Ford factory in Genk, Belgium were given the news that the factory will be closed, and all employees will have to find another job by 2014. This obviously directly affects the 4.264 employees – 3.996 blue-collar workers and 268 white-collar workers – but also means a great loss for the more than 5.000 indirectly affected personnel of the suppliers and subcontractors of the factory. Altogether, approximately 10.000 people will either lose their jobs or see their business severely damaged. Many of the 4.264 employees of Ford Genk are couples, whose families with children now see their situation drastically changed from a double to no income family. The management of Ford Europe claims that the factory suffered from an overcapacity, following a drop in demand of almost 20% since 2007, and relocates most of its activities to a factory in Valencia, Spain, where wages are much lower. A similar story took place in Dagenham and Southampton in the UK, where in total about 1.500 jobs will be axed in Ford factories.
Next to the shock of a sudden loss of 10.000 jobs, many Belgians – yes, for once we all feel Belgian again – are furious about the way the news was broken. For one, the management that decided about the closure, led by Ford Europe CEO Stephen Odell, was not even present during the announcement, communicating through written mail. The official reason was that the security of Odell could not be guaranteed, which not only insulted Belgium’s long tradition of peaceful labour negotiation, but is also perceived as a cowardly excuse for not having to face the thousands of people whose lives were about to be disrupted. On top of that, many feel like Ford broke their promises. Not even two years ago, they signed a million-euro deal with the Flemish government, promising to secure the future of Ford Genk. Even last month, the European management, who claimed they would bring new models to Genk, confirmed the factory’s future. Today, all that seems like false promises and utter betrayal – just as UK labour union boss Len McCluskey calls the loss of jobs in Dagenham and Southampton a “betrayal of the workforce”.
But what does this all teach us about Europe? That the entire top management of Ford Europe are a bunch of bastards? Well, yes, amongst other things. But that is not the point here. Their outrageous handling of their own workforce put aside, there is an undeniable economic logic to their decision. The European automobile industry is in deep trouble. In Belgium alone, next to the Ford drama, the Volkswagen factory in Vorst was saved from closure only because Audi bought it, and recently Volvo decided not to renew the contract of 300 employees in the Ghent factory. So it is no surprise that Ford decided to shrink its capacity and move its focus to superior locations. The factory in Valencia is more modern and its workers are cheaper than those in Genk. It is much cheaper for Ford to just close one factory and move its activities to another, than to upgrade an outmoded factory. Logical conclusion: close Genk, move to Valencia. And with the single European market it is all so easy. And that’s part of the problem.
The EU opened its markets and tore down its borders to allow perfectly free trade and invested in making Europe attractive for big multinationals. What they neglected was the social dimension of such a policy. At the Lisbon Summit, the Member States pledged that Europe would become the most competitive knowledge-based economy in the world by 2010, while at the same time maintaining a commitment to solidarity and equality. Needless to say, the challenge of restructuring the economy while preserving the ‘European social model’ is a daunting one. (see Trubek and Trubek) Indeed, the EU and the entire integration project has for a long time been seen in terms of business opportunities. Yet while the transnational Europe was promoting free trade – which did, lest we forget, generate incredible wealth for its citizens – the concerns for a social model was left with the nation-states – or better, was retained by the nation-states. As Wolfgang Streeck warned, we should have learned by now that the modern European economy is characterized by increased internal competition, not just for goods, services and capital, but also for labour.
But how can labour competition be fair game when there is no Europe-wide regulator? It is precisely labour regulation, including social security and equality, that is still one of the cornerstones of the nation-state. And one cannot blame Spain for having lower wages, or Belgium from having an extensive social security system. I am no economist, so I do not have clear-cut answers to how we can best adjust the European labour system – and I feel that even if I was an economist, I still wouldn’t be able to – but I can tell you that the EU will have to put some effort in its social dimension, and national governments should stop blaming an institution whose hands they tied. The automobile industry might be in overcapacity, but Europe isn’t. On the contrary, it has a lot of work to do still. In this time of lingering economic crisis, words and grand dedications to a social Europe aren’t enough anymore. Just ask Genk’s 10.000 unemployed.
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