Car making to end, but Ford plays up engine plant plans

Extra diesel engine production is promised to soften the blow as car making winds down at Dagenham. Ford blames falling sales and overcapacity for the end of Fiesta production, while unions argue the plant could make other models

ford’s long-expected announcement that it is to end car production at Dagenham was greeted with dismay last week, but plans for a diesel engine centre of excellence on the site could provide the plant with a more stable future.

Following weeks of speculation, Ford revealed it would end vehicle manufacturing at Dagenham in early 2002, with the loss of 1,900 jobs. The cuts are in addition to the 1,350 job losses announced in February, with the decision to move to single-shift production.

The company says the net job losses will be closer to 1,400 than 1,900, because 500 extra jobs will be created in its diesel engine plant. An extra $500m (£320m) will be invested to make Dagenham Ford’s world centre for diesel engine development and production.

The plant will be more technology-based, and diesel engine production is projected to expand by 80-100,000 units within the next three years. With a tie-up with Peugeot of France, this means Dagenham could be making a million engines a year.

As part of the restructuring plan, 240 employees from the diesel engineering and development team at nearby Dunton will be relocated to Dagenham.

The decision to end car production was made in response to a drop in Ford’s European sales and widespread over-capacity throughout the car industry. The company has the capacity to manufacture 2.2 million cars in Europe, but sold only 1.65 million vehicles last year.

Nick Scheele, Ford of Europe chairman, says the company has the equivalent of one full plant’s capacity more than it needs to meet demand. `Even on our most optimistic projections, we do not expect to be selling in excess of two million vehicles a year over the short to medium term,’ he said.

Unions argue that Dagenham could be used to produce other cars from within the Ford stable, such as the Jaguar, Mazda, Volvo or Aston Martin marques, though Ford says its decision is final.

Duncan Simpson, AEEU national officer for the motor industry, says the union will begin discussions with Ford over the next few months. `There are a number of options to discuss with Ford, such as the possibility of building other vehicles at Dagenham, including Volvo or Mazda.’

A spokesman for the MSF union adds. `Between the five car groups, and with Ford developing new vehicles all the time, we feel at least one of these could go to Dagenham.’ The union argues that the company has broken a 1997 agreement that Dagenham would be given production of a new car. It says the agreement was overturned because it is easier and cheaper to make employees redundant in the UK, and claims Ford has a no-redundancy agreement with staff at its Cologne plant.

Despite the headlines, not all the activity has been confined to Dagenham. Ford’s transmissions plant at Halewood on Merseyside will enter a 50:50 joint venture with German transmission specialist Getrag. The new venture will continue to produce existing transmissions for Ford, as well as developing new products for Ford and other vehicle manufacturers. And the plant at Bridgend, in south Wales, which makes the Zetec engine, has been identified as a potential location for production of a new petrol engine.

Trade and industry secretary Stephen Byers says the decision to end car production at Dagenham is `disappointing’, but did not mark the end of Ford’s link with the plant. `The job losses announced will not come into effect until 2002 when production of the Fiesta ends,’ he says. `This gives everyone time to prepare for the change,’ he says.

Byers announced a 10-point plan to regenerate east London and develop the area as a centre for manufacturing excellence. This includes working with Ford to build an industrial park with links to the diesel engine centre, to offer technology transfer opportunities for local companies.

Ford will also proceed with a planned $50m investment in the regeneration of the Dagenham site, including the establishment of an engineering faculty on its education campus. Details of the scheme have not been finalised, but the centre may be open to engineers from outside the company, a spokeswoman says.

Other measures announced by the company include a $12m employee support programme to offer retraining, financial advice and educational assistance. This will be implemented by a joint advisory board including representatives from trade unions, government and local development agencies.

Ford expects to make the job cuts through voluntary redundancies and is offering generous redundancy terms, including pensions and payments of up to £50,700 for long-serving salaried employees.