Ford is planning to turn out 900,000 diesel engines a year by 2004 at its refurbished Dagenham factory, it claimed this week.
The plant, which will lose production of the new Fiesta to Spain next year, is to a benefit from a $500m investment in response to rising European demand for diesel engines.
The plant being turned into a diesel centre as part of a redevelopment plan that will see engine production at the site increase from 650,000 a year to 900,000 in two years’ time.
Kevin O’Neill, director of diesel business Europe at Ford, said diesel engines are set to play a major role in the company’s attempts to reinvent itself and produce more new models each year. ‘At present, 19% of our total engine production capability is given over to building diesel engines. In the near future the percentage of diesel engines as a total of our engine capacity in Europe will be around 30%, and we may even go higher depending on demand.’
Diesel engine growth has risen to 35% of car sales across Europe, and O’Neill expects this to approach 40% by 2005. UK demand is also set to increase. ‘In the UK, diesel accounts for only 14% of the market. However, this is growing rapidly and we anticipate diesel sales could account for 30% of the market by 2005.’
Between 2000 and 2004, Ford will spend over $500m on developing its diesel engineering and manufacturing operations at Dagenham, and the company plans to spend another $500m on its petrol engine plant at Bridgend in South Wales.
As a result, the two UK plants will produce two million petrol and diesel engines a year by 2004, a quarter of all engines sold worldwide by the car firm.
Professor Peter Cooke, head of the Centre for Automotive Industries Management at Nottingham Business School, said global demand for diesel engines and packaged power generators is increasing rapidly.
Diesel engines are also high value-added components, reducing the impact of the uncompetitive pound-euro exchange rate on Ford’s margins.
But he warned the investment in diesel production would not ensure Dagenham’s future indefinitely. ‘Dagenham’s future is sure for as long as the production life of the product. A manufacturer like Ford works globally, and wants to build things as close to where they are going to sell them as possible.’
Ford has established a partnership with PSA (Peugeot-CitroÃ«n) to develop and manufacture four diesel engine types jointly, and help both car firms to gain greater economies of scale. PSA will make diesels for small and medium-sized cars, while Ford will manufacture larger engines for use in light commercial vehicles, and will produce a 2.7 litre V6 diesel.
When production of the Fiesta ends in early 2002, a total of 2,650 people will be made redundant. The expansion of diesel operations at Dagenham will create 500 new jobs at the plant and the company will continue to employ over 5,000 at Dagenham. Around 250 diesel engineers are being moved from Ford’s engineering centre at Dunton to the plant at Dagenham, to work on engine development and design, and support the production team.