Future of Ford plants in doubt: Car workers put on short time - Registrations down on last year - High street spending falls

A SENIOR executive at Ford has warned that its British car plants stand under threat of closure after the company's decision to reduce production at the two main ones.

The comments, by Albert Caspers, Ford of Europe's vice-president for manufacturing operations, came as official figures showed a small drop in national output in the second quarter of the year and a slide in high street spending last month.

Ford's cutbacks, made because of falling sales, are being enforced at Dagenham, in east London, which makes the Fiesta, and the Southampton Transit van factory. Both will join Ford's Halewood plant on Merseyside on short-time working next month.

Ford has been trying to compensate for the sharp decline in domestic sales by exporting more cars from Dagenham and Halewood to Europe. More than half the 1,200 made daily at Dagenham are for export, but sales in France, Spain and Italy have also fallen.

In today's Engineer magazine, Mr Caspers warns: 'If it comes to the point where we have surplus capacity and we have to decide what to do with surplus capacity, then the British plants are at risk.'

Despite productivity improvements at the UK plants, they had still not closed the performance gap with Ford factories on the Continent, he said.

Ford's production cuts reinforce the poor outlook for the industry after disappointing August demand. The company did not expect sales to pick up until the middle of next year at the earliest.

A hoped for increase in sales to coincide with the introduction of the 'K' prefix has failed to materialise despite a pounds 50m advertising campaign. Registrations in the first 10 days of this month were down nearly 2 per cent on last year and not expected to top 370,000 for all August.

Fiesta production will be restricted to three days a week from 4 September for three weeks. Some 2,000 staff will switch to training and housekeeping work, reducing output by about 5,000 cars. At Southampton, vehicles will not be made on five Fridays and one Monday, a cut of 900.

The night shift at Halewood has already been stopped, taking effect when workers return from the summer shutdown, and output of Escort and Orion models cut by 40 per cent.

Workers at Dagenham and Southampton were told of the cuts yesterday after union leaders were informed. Most will continue to be paid full wages, an average pounds 290 a week, although night shift staff will lose a 33 per cent premium for nights not worked.

Jimmy Airlie, chief Ford negotiator for the Amalgamated Engineering and Electrical Union, said the shorter working week was very

disturbing.

'When Britain's biggest car company is forced to go on a three-day week, we fear for the future of the whole industry,' he said.

Central Statistical Office figures published yesterday suggested that economic activity was broadly flat between the first and second quarters of the year.

National output was 0.1 per cent lower between April and June than in the previous three months. But, excluding oil and gas production, output was 0.1 per cent higher, bringing to an end seven consecutive quarters of recession in the non-oil economy.

City analysts said the economy could well weaken during the year's second half as manufacturing industry suffered a further downturn. Even the Treasury was cautious, claiming it was too early to say if the recession was over.

Evidence that the economy has entered the second half of the year in fragile condition came with figures showing a fall in high street spending in July to its most depressed level since March.

Retail sales volume fell 0.3 per cent between June and July, although between May and July it was 0.3 per cent higher than in the previous three months.

The British Retail Consortium, which represents shop and store owners, said there was little sign that things had got better in the early part of this month.

Treasury ministers were keen to talk up confidence in the economy. Anthony Nelson, Economic Secretary to the Treasury, said: 'We are poised for recovery and some recovery in certain sectors is already happening.'

But Gordon Brown, Labour's shadow Chancellor, said it was an illusion and accused the Chancellor - on holiday in Tuscany - of 'sleep walking through the summer'.

He added: 'Unless we have urgent action unemployment will continue to rise and much needed invested will not take place.'

Economic indicators, page 28

Commentary, page 29

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