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Ford to close engine plant in Wales in latest blow to UK car sector

Stock MarketsJun 06, 2019 10:14AM ET
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2/2 © Reuters. Ford logo is seen at the North American International Auto Show in Detroit, Michigan 2/2

By Costas Pitas

LONDON (Reuters) - Ford said it would close its plant in Bridgend, south Wales next year because of falling demand for some of its engines, putting 1,700 jobs at risk in a further blow to Britain's once booming car industry.

Ford, which will take a roughly $650-million pre-tax charge to cover the cost of closing the plant, is making cuts in several countries to turn around loss-making operations in a stagnating European car market.

The U.S. automaker has also repeatedly warned the UK government that it needs free trade to be maintained with the European Union after Britain leaves the bloc, but said Thursday's announcement "has nothing to do with Brexit".

Production of Ford's 1.5-litre petrol engine, which has seen lower demand, will end in February, whilst a contract to supply Jaguar Land Rover (JLR) finishes in September 2020.

Britain's once thriving car sector, rebuilt since the 1980s mainly by foreign carmakers, has suffered slumps in sales, output and investment over the past two years.

"Changing customer demand and cost disadvantages, plus an absence of additional engine models for Bridgend going forward make the plant economically unsustainable in the years ahead," said Ford Europe President Stuart Rowley.

The Bridgend plant, which opened in 1977, built around 20 percent of Britain's 2.7 million automotive engines last year.

Ford said it was committed to its other British engine factory in Dagenham, east London. The firm builds a total of 1.3 million engines in Britain which are exported for fitting in vehicles in Germany, Turkey, the United States and elsewhere.

Britain's biggest trade union vowed to fight the factory closure.

"We will resist this closure with all our might, and call upon the governments at the Welsh Assembly and Westminster to join us to save this plant," said Len McCluskey, head of the Unite union.

Ford said in January a turnaround of its European operations would involve cutting thousands of jobs, possible plant closures and discontinuing loss-making vehicle lines.

It is axing more than 5,000 jobs in Germany and more than 500 white-collar roles in Britain.

Workers have long pushed for Bridgend to produce hybrid technology and electric vehicle components alongside a new third-party manufacturer to fill any surplus space but such investment has not been forthcoming.

"Significant efforts to identify new opportunities have not been successful," said Ford.

The Ford plant closure is the latest blow to the sector this year. JLR has said around 4,500 mainly British jobs would go and Honda has said up to 3,500 roles would be axed when it closes its British plant in 2021.

A series of investment decisions are also pending as sales continue to slide, including whether Peugeot parent PSA will keep its Ellesmere Port plant open and if JLR will choose to make electric cars in Britain.

British car sales are down 3.1 percent so far this year, after falling in 2017 and 2018.

Ford is among many major carmakers which are opposed to a no-deal Brexit, fearing it could add tariffs and customs checks to their vehicles, engines and components, raising costs.

Thursday's announcement, a day after the U.S. President left Britain and as the governing Conservatives pick a new leader, comes as French politicians are scrambling to fend off blame for the collapse of a proposed merger of Renault (PA:RENA) and Fiat Chrysler.

Ford to close engine plant in Wales in latest blow to UK car sector

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