Mazda, the only one of Japan's big car companies without a European factory, intends to make about 25,000 vehicles at Dagenham this year and more in 1996.
Ford, which owns 24.5 per cent of Mazda, declined to comment on the plans. A spokesman said a visit to the plant by Alex Trotman, Ford's chairman, was unrelated. But another source said: "It's been confirmed. Ford is preparing to release the news on Wednesday."
The move is a demonstration of the efficiency and quality control improvements Ford has made at Dagenham, which produces the Fiesta.
The plant has been working well below capacity but had maintained the level of its workforce in readiness for Ford to switch more Fiesta production from Spain to Britain. The company is expected to transfer production of 70,000 Fiestas from Valencia to Dagenham next year. It is not thought to be planning a recruitment drive, though extra workers will be needed as Mazda production increases next year.
Mazda, better known for sporty marques like the MX-6, has agreed that Ford will make a modified version of the Fiesta. The new model will be sold in Europe through Mazda's dealer network as a Mazda-badged small car. The Japanese company will be responsible for outside and inside styling of the vehicle.
Carol Tongue, MEP for Dagenham and former spokeswoman on the motor industry, said: "This is a mark of Ford's confidence in the workforce, and recognition of the high levels of quality at Dagenham We must now look on Dagenham as a world-class plant.''
The two companies already have product programmes in North America and Asia, and are exploring development of new models.
Mazda's Japanese rivals Toyota, Nissan, Honda and Mitsubishi all make cars in the EU, and Suzuki has a factory in Hungary. But Mazda has been forced to make big cuts and cannot afford investment in its own plant. The company was once thought to be in talks with Rover about using spare capacity, but the UK company's link with Honda meant such a partnership was unlikely.
Ford has held a stake in Mazda since 1979, though relations had been strained as Mazda's losses mounted. In the year to March 1994 those losses totalled £282m.
Mazda urgently wanted to get into the growing European car market to avoid import barriers and escape the high cost of the yen.
Ford has made big cuts at Dagenham, including "down days", to prevent stockpiling of new cars. Dagenham has the capacity to produce around 1,200 Fiestas a day, but the average has been 300 less.
Rover's strength, page 34
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