Ford has to pay $200K/employee ($750M) to close an idling plant in Europe.

[TLR Is Mental Poison]

Breaking Up Is Expensive To Do, Ford Finds Out | The Truth About Cars

Breaking Up Is Expensive To Do, Ford Finds Out
By Bertel Schmitt on March 19, 2013

According to lore, it is impossible to close a factory in Europe. Not true. It’s just outrageously expensive. One company that found out is Ford. The carmaker allocated nearly $200,000 per hourly worker of its soon to be closed Genk plant in Belgium.

Ford expects to pay about $750 million in severance to hourly workers when it will close its factory in Genk, Belgium, by the end of 2014, says Reuters after reading regulatory filings.

The plant employs about 4,000 hourly workers and 300 salaried employees. Negotiations with salaried workers at the plant are still under way.

In most European jurisdictions, workers have a job for life after an initial probationary period. This does not mean you can’t fire them. If you do, they are entitled to a hefty severance, decided by a court, or in negotiations with the unions. Average severance payments of $200,000 and higher are normal, depending on the age of the workforce.

A clear example of the good an omnipotent union (written into law in many European countries) can do. A union so great, it's too powerful/expensive for companies to operate under. I guess no job is better than a job under the umbrella of a state backed union

 

[mbewane]

Article didn't talk about the tax cuts Ford (as other firms) get when they come to Belgium though, that's one of the main reasons why they go there.

And those "life-long" employments contracts don't exist: anyone can be fired given a three-month notice, and it's then the Belgian state that covers the fired employee with unemployment benefits. But that firing must be based on something factual : bad work, bad conduct, the firm is losing money, employee is going in one direction while the firm is going in another. The firm usually pays a severance that is a couple of months of salary, time for the unemployment to kick in. But closing the whole plant is a whole other matter, precisely because of the agreements these big firms (like ArcelorMittal in Wallonia - South of Belgium) have with local authorities in order to benefit from tax cuts. Happens about every other year in Belgium.

People get fired everyday in Belgium breh, unions can stage strikes but they don't have that much power anymore. probably still more than in the US or GB, but that's not saying much I guess.

 

[88m3]

Beautiful

 

[TLR Is Mental Poison]

Article didn't talk about the tax cuts Ford (as other firms) get when they come to Belgium though, that's one of the main reasons why they go there.

And those "life-long" employments contracts don't exist: anyone can be fired given a three-month notice, and it's then the Belgian state that covers the fired employee with unemployment benefits. But that firing must be based on something factual : bad work, bad conduct, the firm is losing money, employee is going in one direction while the firm is going in another. The firm usually pays a severance that is a couple of months of salary, time for the unemployment to kick in. But closing the whole plant is a whole other matter, precisely because of the agreements these big firms (like ArcelorMittal in Wallonia - South of Belgium) have with local authorities in order to benefit from tax cuts. Happens about every other year in Belgium.

People get fired everyday in Belgium breh, unions can stage strikes but they don't have that much power anymore. probably still more than in the US or GB, but that's not saying much I guess.

Who said anything about jobs for life. Right in the article they said you can fire people, it's just incredibly expensive.

Now Ford probably fukked up in their negotiations to open the factory there. Why would you open a factory in one of the most expensive countries in the world :userious: But the point is, from a business standpoint, a country where it's expensive to fire somebody or close down an idling factory is a place you probably don't want to set up shop.

I am guessing this was a legacy plant that was opened long before the Euro and all that stuff. Still though, lot of car companies are leaving Europe. Renault is battling its French factories to build capacity in Algeria. Carlos Ghosn said outright to Japan, "do something about your currency or I am closing all Nissan factories here". Etc.

 

[Broke Wave]

OP can't find a corporation he doesn't like. Ford BREAKS a written legal contract with a union and they are forced to pay severance. This is totally a non issue and a non story. Maybe if America had stronger laws there wouldn't be such an intense de-industrialization. But that is something the OP would advocate for, so I'm not sure whether we even see this from the same perspective...

 

[88m3]

shots fired

 

[Robbie3000]

I think that model makes sense. Makes sure companies can't just move into a community, enjoy the tax benefits for X amount of time and then bounce to the next town to suck up their tax benefits. Something that Wal-Mart has all but mastered.

http://www.goodjobsfirst.org/sites/default/files/docs/pdf/wmtstudy.pdf

It probably also incentivices companies to think and plan for the long term as opposed to the myopic 'next quarter' focus of our managers who have all the incentive to cut jobs to meet ridiculous and unrealistic expectations.

 

[Starman]

OP can't find a corporation he doesn't like. Ford BREAKS a written legal contract with a union and they are forced to pay severance. This is totally a non issue and a non story. Maybe if America had stronger laws there wouldn't be such an intense de-industrialization. But that is something the OP would advocate for, so I'm not sure whether we even see this from the same perspective...

There's no way around it, Ford should never have took on such a contract.

I think that model makes sense. Makes sure companies can't just move into a community, enjoy the tax benefits for X amount of time and then bounce to the next town to suck up their tax benefits. Something that Wal-Mart has all but mastered.

http://www.goodjobsfirst.org/sites/default/files/docs/pdf/wmtstudy.pdf

It probably also incentivices companies to think and plan for the long term as opposed to the myopic 'next quarter' focus of our managers who have all the incentive to cut jobs to meet ridiculous and unrealistic expectations.

Well, if a company does think long term they'll avoid contracts that punish closing plants/factories like the plague.

 

[TLR Is Mental Poison]

OP can't find a corporation he doesn't like. Ford BREAKS a written legal contract with a union and they are forced to pay severance. This is totally a non issue and a non story. Maybe if America had stronger laws there wouldn't be such an intense de-industrialization. But that is something the OP would advocate for, so I'm not sure whether we even see this from the same perspective...

What contract are they breaking?

 

[el_oh_el]

What contract are they breaking?

The contract that allows them to run a business in the country

 

[TLR Is Mental Poison]

The contract that allows them to run a business in the country

And they are paying the penalty for it, which includes a generous severance for the workers there

You guys act like they are cutting and running w/o any consequence. $750M must be small change to you guys

 

[Rarely-Wrong Liggins]

Good.

 

[The Real]

And they are paying the penalty for it, which includes a generous severance for the workers there

You guys act like they are cutting and running w/o any consequence.

And you're acting like they were robbed or exploited somehow. Those were all white-collar workers, and Belgium is not some mysterious "no-firing" zone. It seems to me like you're exaggerating on account of your unusually strong faith in large multinationals.

 

[TLR Is Mental Poison]

And you're acting like they were robbed or exploited somehow. Those were all white-collar workers, and Belgium is not some mysterious "no-firing" zone. It seems to me like you're exaggerating on account of your unusually strong faith in large multinationals.

Thats not what I was trying to convey at all. And multinationals are not perfect, ask TWISM how I feel about them.

But I think there is a natural balance between employers and workers, and the situation with the European auto workers shows what happens when employees push too much. Manufacturers can't wait to leave Europe; Europe has legislated its way out of being a place where companies want to manufacture goods. The only losers here are European workers.

And a country doesnt have to be a banana republic or completely whore itself out to attract manufacturing. SE US is seeing a surge of investment in new auto plants, and non union workers there are making living wages & generally happy with their work environments/company relations.

 

[Rarely-Wrong Liggins]

Poor Ford. The filthy workers party raped and fleeced them like African savages raped a pure white virgin!