As Ford Closes, European Rust Belt Seeks New Ideas

(Reuters) -- In the heart of Western Europe, the Belgian-Dutch-German rust belt has been dealt another blow. Two car plants closed this month as companies sought cheaper labor elsewhere, the final chapter of a manufacturing boom that began when coal mines fueling Europe's industrialization shut in the 1960s.

Now the region straddling three borders is trying to reinvent itself. A €315 billion ($385 billion) European Union investment plan, announced Thursday, is the latest potential help. It aims to encourage investors to back projects around Europe needing financing including the startups that could bring new ideas to skilled but high-wage workers.

The final production day at the Ford Motor Co.'s plant in the eastern Belgian city of Genk came barely two weeks after the General Motors Co. closed its Opel Bochum factory across the border in Germany, both part of automakers' strategy to adapt to falling sales following the eurozone crisis.

"I worked at Ford Genk for almost 40 years, I've never applied for another job in all my life," said Pierre Boonen, 57, after one of his last shifts at the plant that generated work directly or indirectly for about 10,000 people. "I never expected this."

Workers have been compensated, but many are older than 40 and have little idea of what to do next. "Even if the young have a tough time finding a job, it's even worse for the older employees," said 53-year-old worker Margot as a group of protesters outside the plant help up signs reading, "What now?"

New Model

With the eurozone economy facing deflation and near-record unemployment, investors are also looking to the European Central Bank to revive business confidence with a U.S-style money-printing stimulus program.

And while the Limburg region is home to other manufacturing and chemical industries, such as chip designer Melexis and life-sciences group DSM, contributing to an economic output bigger than some eurozone countries, the demise of car manufacturing in the border area shows that parts of Europe needs a new economic model.

"In the 1970s and 1980s, the policy was to attract a big plant and that was going to save you," said Karen Maguire, an expert at the Paris-based Organization for Economic Cooperation and Development. "That only lasts for so long unless you can innovate, upgrade and diversify."

One innovative local company is Polyscope, which set up in a disused chemicals plant in Dutch Limburg in 2007. It exports granular plastics that are turned into paper coating or sun roofs to the U.S. and China. It employs 50 people and has annual revenues of $40 million.

"We need innovation connected to our industrial base," said Patrick Muezers, Polyscope's CEO, who previously worked in the automotive industry. "We cannot all be consultants."

'Welkom Tesla'

Work has also begun on a 93-hectare science park on the site of an old coal mine near Genk -- its rotting brick buildings and broken glass windows still dotted around -- to be ready in 2017, with the aim of developing medical and energy technology.

Underpinning the entrepreneurs are public initiatives aimed at effectively removing the Belgian-Dutch-German border to create an economic region that is not limited by national boundaries and linking smaller cities such as Eindhoven, where Philips has its research facilities, to the university cities of Belgium's Leuven and Germany's Aachen.

"There's a lot of potential here. In a wider, 500-kilometer radius, you have 60 percent of the purchasing power of the whole of Europe," said Johann Leten at Flemish business group Voka.

Some in Genk want to see the development of electric cars and have launched a campaign to convince U.S. electric-car producer Tesla Motors Inc. to take over the Ford plant, starting an Internet site called Welkom Tesla. "Nobody was prepared for a complete closure of the Ford plant," said union representative Erik Verheyden. "It would be great to produce a niche product here with a guaranteed market. It could still happen."

(Reporting by Robin Emmott and Robert-Jan Bartunek; Editing by Anna Willard)