During the mid-1990’s, Renault was involved again in serious troubles, after a ten-year period of significant profits, partial privatizations and the launch of successful products (Clio, Twingo, Megane). Renault announced losses of $864m in 1996. About a half of these losses were provisions for the closure of it’s Belgian factory (being announced on 27th February 1996).
This event caused a noteworthy conflict between Europe’s business people and politicians. From the manager’s perspective, the closure of the factory was considered as a cut of overcapacity and a strategic movement at the same time. However this resulted to the loss of 3,100 jobs in Brussels. The impressing was that the factory was placed in a suburb, where Jean-Luc Dehaene, the Belgian Prime Minister was living.
On March 1996, following a visit from King Albert of Belgium, the European Commission stated that in its view, Renault had broken two European Directives and Commission’s President, Jacques Santer, that it was a blow to Europe’s spirit of trust.
The Belgian car industry consists of factories which belong to foreigners (Ford, General Motors, Volvo etc..) and the Belgian employees (over 34,000), feared that the other companies will follow.
Additionally, the French politicians seemed to be in contradiction as well. While the French Minister of Industry, Franck Borotra, was supporting Renault’s decision taken by its chairman, Louis Schweitzer, the President Jacque Chirac made it clear that he was shocked at the way Renault had announced the closure.
Reference: “The Economist”, (August, 1997), Vol. 342, Issue 8007, p. 69
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