Ford will limit jobs loss at Dagenham

Manufacturers will tell workforce that Essex plant will become its world centre for diesel engine production and development

Ford will today seek to soften the blow of ending car production at Dagenham by announcing a £330m investment in the plant's engine facilities that will limit overall job losses to 1,500.

There had been fears the end of Fiesta production at the Essex plant would mean up to 4,000 job losses. But Ford will tell the workforce Dagenham is to become its world centre for diesel-engine production and development. Engine output will more than double, creating around 1,000 extra jobs.

Ford management will also pledge that all redundancies will be voluntary, with workers who accept early retirement likely to receive severance packages of around £50,000. "We have not made anyone compulsorily redundant for 30 years and we do not plan to start now," said a source.

The body and assembly plant at Dagenham will close early in 2002, ending a 70-year carmaking tradition. The new Fiesta will be made in Germany.

The Ford announcement will coincide with a government-backed regeneration plan for the Dagenham area to cope with the lay-offs. Stephen Byers, Secretary of State for Trade and Industry, disclosed during question time in the Commons that the package would include proposals for re-training of the workforce and inward investment.

"Our objective is to provide new jobs for the future, to replace those that might well be lost as a result of Ford's announcement," he said. "It will be a plan based on training to provide skills for those people that don't have them and raising the level of existing skills. It will also include support for the setting up of small businesses, to modernise manufacturing in the locality, and to attract inward investment."

Mr Byers said the Government wanted Ford to delay implementation of any decision to end car production at the plant for as long as possible to allow workers to adjust to the changed circumstances.

He also admitted the strength of the pound in relation to the euro was hurting manufacturing. "Such a euro-sterling exchange rate cannot be justified by any view of the long-term economic fundamentals. I would hope that when people consider the position and look at those long- term economic fundamentals, they will realise that the euro-sterling exchange rate, as it presently stands, simply cannot be justified." Mr Byers said in an interview in January that "recently big inward investors are telling me that we need to make a decision on the euro early in the next Parliament".

But he made clear the pending job losses had not been caused by the pound's strength. "Ford's review of its operations were motivated not by the strength of sterling, not by the employment laws in the UK, but as a result of over-production in the European market.

"Tomorrow's announcement will be a mixture of good and bad news. But what will be clear from it is that Ford will remain committed to the UK and that we will still have Ford as a major employer within this country."

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