Ford announced last week it was planning to close one of its main European factories by the end of 2014. Consequently, the move will result in the loss of 4,500 direct jobs and an estimated 5,000 related subcontractor jobs. Did Ford take into account the chain reaction that will follow?
Ford Motor Company’s Genk plant located in the eastern part of Belgium produces the midsize Mondeo, the S-MAX minivan and the Galaxy car. A comparison of their sales in September of 2012 versus 2011 reveals a 14.9 percent drop in sales. European car sales according to Acea (the European carmaker’s association), dropped 10.8 percent during this same period, primarily attributed to the European debt crisis. For the record, the announcement came one month after Ford’s management gave reassurances about continuing production at the Genk plant which represents about one-third of the automotive production in Belgium.
Let’s examine the chain reaction that will follow. I will stick with my area of expertise, food-away-from home. Think about the reduced sales of breakfast and/or lunch sales or better yet catering sales due to the reduced labor force at Genk. Specifically for Delicatesse Catering, an established caterer located in Genk since 2001. After the layoffs, they will most probably sell fewer sandwiches; less sandwiches means a reduction in supply chain sales for their bread, protein, cheese and packaging suppliers. Less supply chain sales will result in layoffs – bakers, route drivers, etc. I do not know if Delicatesse Catering has the vending contract for the Genk plant, but think about the chain reaction associated with lost vending sales. Etc., etc., etc.
Are chain reactions a harbinger of our new global economy?