Ford warning to UK plants

FORD WARNED yesterday that its British car plants have two years to narrow the productivity gap with their United States and European rivals or face the threat of closure.

Sir Alex Trotman, chairman of Ford, said that job cuts were likely anyway at the Dagenham plant in Essex and Halewood on Merseyside which are 20 per cent less productive than the company's most efficient factories in the US. He blamed working practices, too many workers not directly involved in production, and the layout of the plants.

Sir Alex's warning followsBMW's threat to close Rover's Longbridge plant in Birmingham unless unions agree to sweeping changes in working practices. BMW has already warned that 2,400 jobs will have to go from the 17,000- strong workforce.

Speaking at the Confederation of British Industry conference in Birmingham yesterday, Sir Alex said that Ford's UK operations, which employ 28,000 people, were feeling "the heat of global competition".

The Dagenham plant is already on a four-day week and Sir Alex refused to rule out further cutbacks in production in the new year. Asked what would happen if productivity had not improved by the turn of the century, Sir Alex said: "We will face that then. If we cannot close the productivity gap then we will have to do what we feel is necessary."

Ford's chief executive-designate, Jac Nasser, has already warned that it will be hard to justify further investment in the two UK plants unless there is a big improvement in productivity. Sir Alex said Ford was selling between 1.6 million and 1.7 million cars a year in Europe compared with a production capacity of 1.9 million vehicles.

Under the Ford 2000 programme, the company has cut costs by $5bn (pounds 3bn) in the last two years and by $1.9bn in the first nine months of this year. The Ford chairman also predicted that there would be as few as six car manufacturers left in the world in the next century as the industry underwent a wave of consolidation to tackle overcapacity.

He said there was enough excess capacity today to build an extra 19 million vehicles and predicted excess capacity would rise to 22 million vehicles by 2002.

Peter Mandelson, Secretary of State for Trade and Industry, yesterday visited the Longbridge plant to speak to unions and management following his warning that workers there had to "sharpen their act" if they wanted to keep their jobs.

But John Redwood, the shadow trade and industry secretary, criticised the Government's "audacity" in blaming lagging productivity on workers and management.

Addressing delegates, he pinned the blame on the Government's macro-economic policies and its mounting restrictions on business. "The Government should realise that the main cause of lower profits and less competitiveness in recent months is the Government's own actions, not those of business," he said.