Ford says Jaguar's losses were too big to be ignored

Ford motors yesterday blamed Jaguar, the iconic British luxury car manufacturer, for the bulk of its huge losses in its upmarket car division, saying it was forced to axed 1,150 jobs in the UK to save the business from ruin.

Ford motors yesterday blamed Jaguar, the iconic British luxury car manufacturer, for the bulk of its huge losses in its upmarket car division, saying it was forced to axed 1,150 jobs in the UK to save the business from ruin.

Ford's Premier car division, of which Jaguar is a part, made a loss of $362m in the second quarter, leading to a radical review of operations at Jaguar. "The deterioration in performance has been particularly apparent at Jaguar," Mark Fields, the executive vice president of Ford's Europe and Premier division, said. "Numbers like $362m speak for themselves and can't be ignored." Sales of Jaguar in the US fell 12 per cent in the year to the end of August.

The job losses and shift in car assembly from its 50-year-old Browns Lane plant in Coventry to Castle Bromwich in the West Midlands will lead to cost savings of $120m (£67m) per annum for Ford, but the actions will cost it $450m in a one-off charge. Of this, it will take a $375m expense charge this year, which will hit its earnings by 25 cents. Based on figures excluding these restructuring and redundancy costs, Ford increased its earnings forecast to $1.90 to $2 a share.

Joe Greenwell, the chief executive of Jaguar, said the company was in serious financial difficulty, making "unsustainable" and "unsupportable" losses that were threatening the viability of the business. "These actions are essential for the future of Jaguar" he said.

Jaguar, bought by Ford in 1989, has been updating its product range in recent years, adding diesel engines to appeal to European buyers and building sleeker, sportier designs to appeal to a younger generation of wealthy drivers. Sales had been improving, up 22 per cent in the UK this year, with sales of its X-type up 35 per cent. It announced the launch of a new all-aluminium sports car and two new diesel-engined models yesterday. But Mr Greenwell said the costs of the business, which runs three assembly sites in Britain, were too high. "We have grown the business, but it has not been enough to support it. Since the start of the year, our position has deteriorated and we can't support three assembly lines," he said.

Ford will keep open its Browns Lane site, where Jaguar cars have been produced since 1952, albeit on a much smaller scale. About 310 manufacturing jobs will be kept on to make the wood veneer interior parts to Jaguar cars. But car assembly will end at Browns Lane in 2006, with the loss of 400 jobs. A further 750 jobs will be axed from Jaguar's office staff.

Although 425 jobs will transfer to Castle Bromwich, 300 jobs will be created at is Aston Martin plant and the company has said there will be no compulsory redundancies.

Unions, however, said the move was a "kick in the teeth" to workers and they would fight the action. Tony Woodley, the general secretary of the Transport & General Workers Union, said: "We are not prepared to see British workers treated as cannon fodder to satisfy American shareholders."

Unions and workers had feared Ford would shift production of Jaguar cars to the US. "That is not in our plans right now. Britain is a good place to build cars and do business, but it has to be in the right way," Mr Fields said. Last month, Ford ordered production of Jaguar cars to slow to cut down on unsold inventory.

In another blow to the Jaguar brand, Ford announced it was withdrawing from Formula One racing. It has had a team since 2000, but said it could see "no compelling business case" for continuing. Its F1 business has been put up for sale.