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Ford's plants in Europe plunge pounds 180m into the red

Ford, the US car giant, yesterday revealed a plunge into the red at its European operations last year, blaming falling demand, intense competition and huge overcapacity.

The group's European vehicle-making empire yesterday reported losses of $291m (pounds 180m) in 1996, compared with profits of $116m in 1995. Ford traditionally waits several weeks before breaking down the results for the UK, but the figures suggest losses from its British subsidiary have worsened considerably. In 1995 Ford Motor Company, the UK business, made losses of pounds 213m, down from profits of pounds 25m recorded in 1994.

Last night Ford's unions succeeded in getting time allocated for a Parliamentary debate next Wednesday on the company's plans to cut 1,300 jobs at its plant at Halewood on Merseyside. Tony Woodley, national organiser for the car industry for the Transport and General Workers Union, claimed Ford had distorted the underlying profitability of its European operations and promised to reveal "dynamite" information about Halewood's financial strength.

He said: "We believe Ford has not disclosed the true figures here. We will be injecting into next week's debate company documents which will blow the lid off any thoughts that the new Escort should not be built in the UK."

Ford is continuing to lobby the Department of Trade and Industry to come up with substantial state aid to keep Halewood open. Last week Jac Nasser, chairman of Ford of Europe, confirmed that the factory had lost out to sites in Spain and Germany in the scramble to build the replacement for the Escort, due in 2000.

Until then Halewood will concentrate on building a basic version of the existing Escort, likely to be called the Classic. However, after 2000 its role is likely to decline to producing a single niche version of the new Escort to compete with "people carriers" launched by other European manufacturers.

Unions are planning to ballot Ford's entire UK workforce on strike action. Mr Woodley said other British sites would face possible closure, including the Southampton plant which makes the popular Transit van.

The losses took their toll on Ford's world-wide profits last year, which fell by $400m to $1.6bn. In the US earnings rose from $1.8bn to $2bn, helped by continuing strong demand for the company's truck range. It sold 780,000 of its legendary "F-series" small pick-up trucks last year, making it the best-selling vehicle in America for the 15th successive year.

However, another area of severe weakness was in South America, where Ford lost $642m, compared with losses of $94m in 1995. The problems stemmed from the 1995 decision to abandon its joint venture company with Volkswagen in Brazil and Argentina, known as "Autolatina".

The group's market share in Britain fell below 20 per cent in 1996 for the first time for decades. Its slice of the crucially important UK car market has declined from more than 25 per cent since 1990 alone.