Halewood on rocky road as Ford cuts costs

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The Halewood car plant on Merseyside, where Ford will today announce 1,300 job losses, has become another victim of the ruthless economics that rule the modern-day motor industry.

At its height, the plant - which has been building Escorts since 1968 - employed 14,500 workers and produced nearly 200,000 cars annually. But in the last six years the workforce has slipped by 3,000 to just over 5,000 while production of the Escort, now its only model, shrank to 153,000 in 1996.

Last year, for the first time since 1991, the Escort also lost its place as Britain's best-selling car to the Fiesta. It was partly that decline in sales which decided Halewood's fate.

The current Escort is built at three plants in Europe - the other two being Saarlouis in Belgium and Valencia in Spain. Next year, when the new Escort appears, Ford has decided that it will be built only in Spain and Belgium.

Taking labour costs, productivity, currency movements and quality levels into account, Halewood compares reasonably with Saarlouis and Valencia. But economics dictates that it would be too expensive to build new production lines at three sites, while demand dictates that Halewood should be the plant to pay the price.

In the 1980s, the Escort alone accounted for 10 per cent of UK new sales, driven largely by demand from the big commercial fleet buyers.

Last year, its market share dwindled to 6 per cent as Ford switched its marketing strategy, concentrating instead on the private buyers and abandoning the cut-throat rental market.

The result was that United Kingdom sales of the Escort slipped to 128,760. Although Halewood still managed to export 21,000 Escort cars and vans, the strength of the pound made UK-built vehicles less price competitive.

The change in marketing strategy saw Ford's share of the UK car market fall to below 20 per cent for the first time 1971.

The company's woes were compounded by a sharp downturn in fortunes right across Europe. In the first half of 1996, its European operations made a pounds 159m profit but in the third quarter that turned into a pounds 279m loss.

Ford executives decided that surgery was urgently needed. A week ago the chairman of Ford of Europe, Jac Nasser, interrupted the upbeat mood of the Detroit Motor Show, warning that tough action would be taken to get the company's cost base down.

Today, the Halewood workforce will discover how tough. But it is not all gloom.

Ford has pledged that there will be no compulsory redundancies and has held out the prospect of Halewood producing a new model when output of the Escort ceases next year. The new model will be a people carrier vehicle, based on the Escort platform, similar to the Scenic which is made by Renault and has just been voted Car of the Year.

But people carriers, although popular, will never be produced in the same volumes as the Escort, and employment levels will never return to the heady days of the 1970s and 1980s.

A grand car-making tradition, that began on Merseyside 34 years ago with the production of the first Halewood Ford Anglia, will never be the same again.