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Ford to cut 1,500 U.K. jobs
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February 18, 2000: 6:27 a.m. ET
Carmaker slashing payroll at troubled British factory to boost European profit
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LONDON (CNNfn) - Ford Motor Co. said Friday it will cut 1,500 jobs at a troubled British plant in a bid to improve the profitability of its flagging European operations.
Overcapacity, turbulent industrial relations and keener competition from rivals pushed Ford Europe to a $55 million fourth-quarter loss last year while its U.S. parent had record profits and European auto sales were at record levels.
The strike-hit U.K. factory at Dagenham, near London, is the focus of the shakeup, with 1,500 jobs set to go this year, more than a third of the factory's work force.
Ford's European Chairman Nick Scheele said further cuts at European plants can't be ruled out. "It is a significant step that we are taking today, but it is not a total cure to our problem," Scheele told a news conference in London.
He said there will be a full review of all Ford European operations, including assembly plants and suppliers, that is expected to be completed in the next two to three months. Analysts suggested the company, which employs 105,000 in Europe, might be operating at just 70 percent of capacity.
Unions representing Dagenham workers said they will fight the cuts, adding to labor tensions at a plant that has been beset by problems including allegations of racial discrimination and a strike vote by professional workers over pay and conditions.
Ford Chairman and CEO Jacques Nasser was forced to mediate personally in the race dispute after unions expressed a lack of confidence in the U.K. management.
The Dagenham plant is one of three Ford has in the U.K., where the company employs 29,000. The factory builds Fiesta small cars and Transit vans, and is also Ford's only European engine facility.
While auto sales in Europe are booming, exports from the U.K. have been hit by the 15 percent rise in the value of sterling over the past year, making Ford's U.K. plants the most expensive of its 45 European sites.
"It once again smacks of it being far easier and cheaper to sack British workers," said Tony Woodley, chief motor negotiator for the Transport and General Workers' Union. "We are not prepared to be treated unfairly or disproportionately with other workers across Europe."
Ford consistently led Europe's auto industry in market share through the 1980s, but has seen its share slide under pressure from such rivals as Volkswagen (FVOW), which is now the region's largest automaker.
Ford, the world's second-largest automaker, last month posted a record group profit, but earnings in Europe slumped to $28 million in 1999 from $193 million a year earlier.
Its European market share last year fell to 9.7 percent from 10.3 percent, according to the European Automobile Construction Association. It ranked third behind VW, by far the leader in Europe, and General Motors (GM: Research, Estimates).
While Ford's European factories are considered among the most efficient in the region, the automaker has suffered from a weak product range and increased marketing efforts by competitors. The Fiesta and mid-sized offerings such as the Mondeo, which were among the five top sellers in all the major European markets, have fallen out of favor with customers. Only the new Transit van has received praise from analysts.
Ford (F: Research, Estimates) shares closed down 7/16 at 45-7/8 in New York Thursday.
In a separate development, German carmaker BMW denied reports it had received a bid approach, with media reports pointing to Ford as a possible candidate. Ford declined to comment on the reports, while BMW (FBMW) shares jumped 7 percent. 
-- from staff and wire reports
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