Ford plant closing in Belgium could open floodgates

• European car sales are falling as economies struggle
• Car plants generally don't make money at less than 80% capacity
• Plant in Genk, Belgium, was operating at 68%; the work goes to Spain

Just two years ago Ford said a then-new four-year contract with Belgian auto workers "secures the future for Ford's Genk" factory and "provides a solid basis for a viable future for Ford car production and vehicle development and validation in Belgium."

Today, Ford said "nevermind."

The U.S. automaker with extensive European operations that it forecasts will lose $1 billion this year, says it will close Genk in 2014. About 4,300 people work at the plant, about 62 miles from Brussels. Belgian estimates put the total potential jobs the closing would cost at more than 9,000 -- in a small country where GM closed its Opel plant in Antwerp just a couple years ago.

Ford is meeting in the U.K. with unions Thursday to discuss closings.

Detroit automakers are bleeding money in Europe, wrecking Detroit's otherwise surprisingly healthy earnings not long after two of the three were in Chapter 11 bankruptcy reorganization and the third, Ford, escaped because it borrowed hugely ahead of the recession.

Ford expects to lose $1 billion in Europe this year, twice what it forecast earlier. And General Motors has been losing more than that, on average, for longer than a decade. And Chrysler profits now are supporting its bankruptcy rescuer Fiat's losses in Europe.

Ford's move is dramatic on a continent where unions hold considerable power and governments resist any plant closings. It could break give other automakers permission to announce similar shutdowns.

The dire reality also could force other countries into versions of the bailouts that saved U.S. automakers.

"This (closure) wasn't the plan," says Ford of Europe spokesman Mark Truby. "Initially we had committed to build the next-generation Mondeo and S-Max and Galaxy at this plant, but the contract has a clause for significant decline in market conditions."

And decline it has. Europe has enough factory capacity to built about 22 million vehicles a year. Last year, about 18 million new vehicles were sold there; this year's forecast is 14 million. "And we don't expect that to get better next year," Truby says.

The result of so much overcapacity, Truby says, is "heavy, heavy discounting." And losses.

Ford plans to shift production of the next-generation Mondeo midsize car (Fusion in the U.S.) and S-Max and Galaxy minivan/utility vehicles from Genk to Valencia, Spain, another underutilized plant running at just 68% capacity.

It takes 80% to be profitable. U.S. auto factories, in good times, often run at more than 100% rated capacity using overtime and weekend shifts.

Ford will shift production of its C-Max and Grand C-Max minivans to Saarlouis, Germany, to free the necessary room in Spain.