Ford plans to axe factories and jobs in bid to restore fortunes

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The Independent Online

The board of Ford Motor will this week consider sweeping plant closures and thousands of job losses in a last-ditch attempt to return the historic car maker to profitability.

America's second-largest car manufacturer may close eight assembly and parts plants in America, Canada and Mexico in a dramatic drive to stem losses and realign its production capacity with its shrinking market share, according to US reports.

There is also ongoing concern about the future of Jaguar, its British-based, loss-making luxury brand. There has been speculation that Ford plans to reduce Jaguar production by up to 7 per cent next year. The company may also sell Jaguar's base since 1952 in Coventry, where car production ceased in July but where wood workshops and a small number of administrative staff remain. Ford has said if it closes the Browns Lane site, it would move the 500 remaining employees to another plant.

Speculation is rising about which plants might be in the firing line ahead of Ford's plan to unveil a rescue plan, named "Way Forward", next month.

The company, the third-largest car maker in the world after General Motors of the US and Japan's Toyota, has lost more than $1.4bn (£803m) before taxes this year in its key North American market. Its sales have fallen 4 per cent and its shares have slumped almost 30 per cent since June.

Both GM and Ford are struggling with a combination of problems. The companies, which used to dominate the car-making industry, are struggling with fixed contracts with the United Auto Workers union, which guarantee generous salaries and benefits for workers.

At the same time, high petrol prices have led to a dramatic fall-off in sales of large sports utility vehicles, which were a key driver of profits for America's car makers in recent years.

GM and Ford have lost out to Asian car makers such as Toyota and South Korea's Hyundai, which operate profitable plants not just in countries with low labour costs but also in the US.

William Ford, the great-grandson of the company's founder, Henry Ford, and its current chairman and chief executive, said in October that the recently appointed head of the troubled US operation, Mark Fields, would "make recommendations for my review by December".

Mr Ford added: "Our most significant challenge going forward is our cost structure which clearly isn't where it needs to be. That is why one of Mark Fields's principal charges is to align our plants and our people to the market. That plan will include significant plant closings where facilities don't fit our strategy moving forward."

Ford is holding a two-day board meeting starting tomorrow. According to Automotive News, a Detroit-based newspaper, Ford will consider closing plants in Atlanta, St Louis, St Paul, Minnesota and Cuautitlan, Mexico. Ford would not comment.

The company also intends to use a range of marketing strategies to boost its sales, including targeting "soccer moms" in traditionally Republican states who might have switched to lower-priced, Asian-made cars.

The company is also revamping its brands. However, underlining Ford's difficulties, sales of its once-popular, medium-sized SUV, the Ford Explorer, plunged 52 per cent in November compared with a year earlier, despite an extensive redesign of the vehicle.

Pressure is also mounting on GM's chairman and chief executive, Rick Wagoner. While Mr Wagoner stemmed some criticism by announcing a $1bn ($575m) cost-cutting programme in October, he is expected to face tough questions about when the car maker will return to profitability at the company's board meeting today.