Ford is to close its Southampton plant and its stamping operations at Dagenham next year with the loss of 1400 jobs.
The move comes as part of Ford’s European restructuring which has already led to the closure of its Mondeo plant in Genk, Belgium. In total, Ford will lay off 6200 jobs, around 13 per cent of its workforce, across Europe. The total UK job losses includes logistics and support functions.
Last month, Ford said losses from its European operations could reach £929m this year. It blames a 20 per cent drop in demand for vehicles in Western Europe for the restructure.
The commercial vehicle market has been squeezed by the recession. Figures released by Ford shows its medium commercial vehicle sales fell by 19 per cent between 2007 and 2011, while light commercial sales slumped by 34 per cent over the same period. As a result, Southampton had been operating at 50 per cent capacity.
The closure at Southampton will lead to 500 job losses, with many more predicted in the supply chain. Dagenham’s stamping operations currently employs around 750 workers, some of whom are expected to be redeployed in the firm’s diesel engine production centre on the same site.
Southampton has been operating a single shift since 2009. It had been previously understood the plant would produce chassis cab variants of the next-generation Transit, but production will shift to Kocaeli, Turkey alongside the new 'one-tonne' Transit Custom and 'two-tonne' Transit panel vans.
The Dagenham Diesel Centre will begin production of a new global 2.0-litre, four-cylinder diesel engine in 2016, which is being developed at Ford's R&D operation in Dunton, Essex where the centre's 3500 jobs are unaffected by today's news.
Paul Everitt, SMMT chief executive, said: “This is difficult and disappointing news for all the people and families affected by today’s announcement, but it is part of wider restructuring to ensure a stronger and more competitive European automotive industry. The immediate priority is to help those impacted secure alternative employment.
“Ford has renewed its commitment to the company’s core R&D, design and engine manufacturing operations in the UK and these will continue to provide long-term and high value employment to many thousands of people. The UK automotive industry has seen £6billion of new investment from a wide-range of global vehicle manufacturers during the last two years and there is demand for skilled workers in the automotive industry and other high value manufacturing sectors."
Stephen Odell, CEO Ford of Europe said: "We have to act quickly and decisively to address the collapse in consumer demand in Europe today and position Ford for profitable growth tomorrow. We are reaffirming our commitment to the UK with a major investment in powertrain and engineering and one which will reinforce the UK’s central role in Ford’s global powertrain strategy"
Ford says it is unlikely to regain profitability in Europe until the middle of the decade, which will be driven by improved volume, market share and growth in emerging markets. It is targeting a long-term operating margin of between six and eight per cent in Europe. Ford has also announced third quarter 2012 pre-tax profits and earnings per share are better than those of the second quarter 2012. Full third quarter losses will be announced on October 30.
Joe Greenwell, Ford of Britain boss said: "While this is an important new investment in UK R&D, engineering and manufacturing, we fully recognise the impact these actions will have on the workforce at Southampton and Dagenham Stamping and Tooling operations. Investing in what we do best here in the UK, and building on our strengths is the only way to deal decisively with the new economic reality in Europe, and help build a profitable business."