The decline of the automobile industry in Belgium has been largely offset by other sectors, estimate two economists. They point out that industrial production is, however, not a good indicator for measuring the economic health of a country. And prefer to focus on added value. This is precisely where the problem lies.
Renault Vilvoorde (1997), Opel Antwerp (2007), Ford Genk (2014) and now Audi Brussels (2025). The Belgian automobile industry seems to be on the verge of disappearing. However, this is not the first time that such concerns have arisen in Belgian industrial history. In 1970, concerns about the future of automobile production were perhaps even greater than the prevailing pessimism today.
However, since 2000, industrial production in Belgium has increased by 80%. “Thus, we can deduce that loss of production in the automobile industrywhich has practically disappeared, was more than compensated by an increase in production in other sectors,” analyzes economist Paul De Grauwe (London School of Economics). “Singularly,” he remarks, “it turns out that the pharmaceutical field experienced a striking explosion in its production. In volume terms, we are talking about an increase of 1,000% in a quarter of a century.”
Thus, the economist estimates that the danger is that the losers of the old industries try to convince politicians that they are indispensable and that they must therefore be protected and/or subsidized (for example by a reduction in energy prices). “This is what is in full swing today in the name of a “new industrial policy”. Those who say that we can do without these old industries are considered crazy.”
Industry vs services: a growing imbalance
The economist recalls the two ways to measure industrial production: in volume (this is the element which increased by 80%), or in added value. “Regarding this second option, we see that the increase is still there (15% since 2000), but lower than that of production in volume.”
So, how can we distinguish added value from industrial production? It is worth looking at the “price effect”. “The prices of industrial products tend to decrease compared to those of services. For example, the cost of a cell phone has fallen considerably compared to what it represented for a household 20 years ago. While the hairdresser costs a lot more,” notes Paul De Grauwe.
Services obtain a higher share of GDP each year at the expense of industry.
This means that the weight attributed to industrial production in GDP – which is a measure of added value – tends to decreaseand this while we produce more and more. “In other words, services obtain a higher share of GDP each year at the expense of the industry.” The impression that the industrial sector tends to decrease in volume is not correct. “On the other hand, the added value of production tends to decrease.”
Selon Paul De Grauwe, what we observe today in the automobile industry is comparable to the loss suffered by agriculture. «Au 19e century, agricultural production represented around 50% of total value added. Today, it is around 2%. Are we producing fewer agricultural products than during the 19the century? No, on the contrary, we are producing massively more.”
Industry: the importance of added value
The economist Geert Noels (Econopolis) agrees with this analysis. “In Belgium, we have actually seen strong growth in industrial production since 2000. This is an astonishing observation.since in other neighboring countries, it is almost flat. This does not mean that economic activity was less there. In fact, the measurement of industrial production is prone to false conclusions.”
Economists prefer to measure the added value of the industry than its production in volume.
Here too, the distinction between production volume and added value is essential. For example, an Nvidia chip – which costs $35,000 per unit – will not require production in the millions to obtain very high added value. Conversely, the production of cardboard boxes will require massive production to result in low added value. “This is the reason why economists prefer to measure the added value of industry and not industrial productionexplains Geert Noels. The latter does not make a distinction and only allows an observation in the short term.
Since 2000, the growth in added value, of 15% in Belgium, is well below the European average of 37%. However, Belgian GDP increased by 55% during this period. “This means that we have not lost all industrial activity, but that it is more niche. The critical mass has lost its feathers. Switzerland and Sweden, for example, have experienced much more favorable developments than Belgium,” notes Geert Noels.
Diversification at half mast
According to him, industrial production is therefore not a good indicator of the economic health of a country. “That doesn’t mean it’s no longer important; we see it with Tesla in the United States or with BYD in China. But these companies go beyond just production. They integrate big data and AI into the automotive ecosystem.”
In Belgium, we are losing activities that we should not lose for the good performance of the circular economy.
The closure of Audi Brussels therefore not only represents job losses, but also the disappearance of a larger structure. “Especially since the factory manufactured high-end electric cars.”
The expert finally notes that Belgian industry is less and less diversified. “We are losing activities that we should not lose for the good performance of the circular economy. The chemical, steel, or IT sectorsenergy-hungry, are also under pressure. To ensure good quality health care and control the cost of an aging population, an economy that depends too much on public employment is no longer tenable.”
Related News :