Renault shut a profitable Belgian plant with no warning — and rewrote EU labour law

On Thursday 27 February 1997, Renault chief Louis Schweitzer announced — with no prior notice to unions, the European Works Council or the Belgian government — that the Vilvoorde plant near Brussels would close by July. Vilvoorde built the Megane and was profitable. The move cut 3,100 direct jobs and an estimated 1,000–1,500 among subcontractors, all told with five months' notice and no negotiation.

The decision came a year after Renault posted a record loss of roughly 5 billion francs (~$1B) and faced 20–30% overcapacity in Europe. Closing a plant abroad, rather than in France, looked to Schweitzer like the clean route to the 4 billion franc savings in his 'plan compétitivité'. The market agreed: Renault's stock rose 13% on the day.

What Renault had not priced in was the reaction. Workers occupied the plant and blockaded new-car shipments; the strike spread to Renault sites in France and Spain in the first coordinated cross-border 'euro-strike'. Belgium's king and EU Commission president Jacques Santer condemned the move, and the Belgian government sued.

Belgian and French courts annulled the closure for violating information-and-consultation rules — Renault had briefed the works council about everything except the decision itself. The case became the catalyst for Council Directive 98/59/EC, which hardened the EU's collective-redundancy consultation requirements, and for a Belgian law of 13 February 1998 on factory closures.