To support Belgium’s last car factory, the Flemish government offers a subsidy package of up to €119 million to Volvo Cars. The offer was sent as an official letter to the headquarters in Gothenburg. Will this address the root of the problem, or does it just buy time?
As Volvo gears up for its new plant in Slovakia, where wage costs are much lower, the Ghent factory faces a cost problem. It feeds fears that the last car plant in Belgium, and the country’s biggest industrial employer, faces an unwelcoming fate.
The problem is that the car brand’s current sales performance doesn’t justify a new factory. That decision was made by the previous CEO, Jim Rowan, based on disproportionate and flagrant growth (1 million units in Europe) that has yet to materialize (EU: 332,000 units in 2025).
What’s in the package?
Politics have come into play, as Prime Minister De Wever installed a special task force to help secure the factory’s future in Ghent. The first action is a 119 million-euro subsidy package.
This is not a gift – it would not be allowed under EU rules. Minister-President of Flanders, Matthias Diependaele (N-VA), was careful to frame this as anything but a blank cheque.
The package breaks down into three parts: €80 million in innovation support – spread over ten years – covering advanced manufacturing, electrification, battery technology, and digitalization; €30 million for sustainable investments in energy efficiency (energy cost is a big headache for industrial sites in Belgium) and circular production processes. A further €9 million will flow to training support for Ghent’s 6,500 workers.
Been there before
None of that money is unlocked unless the investments actually happen. The Flemish government says it wants to see concrete commitments from Volvo and its Chinese parent Geely before any funds are released.
The subsidy offer is politically logical. It shows the Flemish government is acting, and doing something is better than doing nothing. But the track record in comparable situations doesn’t offer much comfort.
Ford Genk also received subsidies and was told it would have to repay €42.9 million upon its 2012 closure. Ford politely declined, handing over its buildings for a symbolic euro instead. Renault Vilvoorde, Audi Brussels, and Opel Antwerp all received state support at some point. But it didn’t stop top management from eventually pulling the plug.
Structural disadvantage
There’s only so much a government can do. Subsidies buy time and can improve competitive positioning. What they can’t do is fix underlying structural issues: energy costs, wage indexation, and permitting complexity.
Ghent has one more structural disadvantage: it’s the only Volvo factory in Europe without megacasting capability. The new generation of electric Volvo models requires this process – large sections of the chassis cast as single aluminum pieces – and installing it costs hundreds of millions of euros (for which the subsidies could sweeten the pill).
Gothenburg has it, and Kosice has it. Therefore, the 40 series will move to Slovakia, leaving Ghent with the EX30 as its anchor. With around 6,500 employees, Ghent is roughly the same size as Volvo’s Torslanda plant near Gothenburg, while the new Košice factory in Slovakia is expected to create about 3,300 direct jobs — a reminder of how much industrial weight is at stake in Belgium.
Geely choosing Spain?
There’s a scenario that could change everything. Since Volvo’s mother company, Geely, uses shared EV platforms across its entire portfolio – Volvo, Polestar, Zeekr, Lynk & Co, and its own brand – the Ghent plant could potentially become an assembly hub for sister brands trying to dodge European import tariffs.
But, surprisingly, rumors appeared that Geely wants to buy an assembly line at Ford’s factory in Valencia to manufacture those Geely-branded models. The irony would be bitter. Valencia is also the factory preferred for manufacturing the Mondeo and S-Max/Galaxy assembly, taking over those models from Ford Genk after it closed.
