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Ford will stop making vans in Britain next year, cutting 1,400 jobs on top of 4,300 to be axed in Belgium as part of a plan by the U.S. car maker to stem European losses expected to exceed $1.5 billion US this year.
It is the fourth vehicle plant closure in recession-hit Europe announced this year and comes just a day after Ford itself said it would shut its 48-year-old Genk plant in Belgium by 2014, as part of a wide-ranging restructuring program.
The company said the moves would reduce installed vehicle assembly capacity by 18 percent, with related gross annual savings of $450-500 million. Thirteen percent of its European workforce would be affected by the restructuring.
Analysts said the speed of the announcements showed Ford was tackling the problem of over-capacity in Europe head-on, while other companies appeared to dither.
"With GM Europe you always wonder what's going on -- it looks like they are still bogged down in deciding what to do," London-based UBS analyst Philippe Houchois said.
General Motors has said it would shut a factory in Belgium in 2016 and will update its restructuring plan before the end of the month.
Ford said despite the loss in Europe, total company pre-tax profit, excluding special items, was better in the third quarter than in the second and that over the long term, it was aiming for an operating margin of 6-8 percent in Europe.
A union leader said earlier the company was also closing a stamping plant which makes parts for the Transit van.
"In 2013 Ford is closing its stamping plant in Dagenham and the Transit van plant in Southampton and that could lead to the loss of a couple of thousand jobs," said Roger Maddison, the Unite union's national officer for the automotive industry.
"This means all production for the Transit van will move to Turkey."
Ford's engine plant at Dagenham in Essex escaped the cuts and is likely to see growth plans. A source close to Ford had said earlier it would unveil plans to produce new diesel engines in Dagenham, which employs some 4,000 staff making engines and panels.
Analysts at Morgan Stanley believe Ford is "demonstrating the vision and industrial courage" to make tough decisions that will pay off long term. The U.S. autos giant employs 11,400 at British sites which also include Halewood, near Liverpool, and Bridgend in South Wales.
The Swaythling factory at Southampton, on England's south coast, has built about 6 million Ford Transit vans in 45 years but in 2009 the workforce was cut to around 500 from roughly 1,000 when the plant moved to a one-shift operation.
"The Transit van is associated with the ‘white van man' tradesmen in Britain and is iconic, like London's black cabs, and it will be sad to see it go," said Madison.
Earlier this week Manganese Bronze, maker of London's black taxis, said it is set to appoint administrators after failing to secure funding needed to survive, putting hundreds of British jobs at risk.
Securing increased production by foreign-owned car makers based in Britain had hitherto been one of the few bright spots in Britain's drive to boost manufacturing.
Earlier this year, General Motors Co opted to build the next generation of its Astra compact in Britain, instead of at its German plant in Bochum.
Japan's Nissan, Toyota and Honda as well as Tata Motors' Jaguar Land Rover have all committed to production in Britain in recent months.
Christoph Stuermer, Frankfurt-based analyst at IHS Automotive, said Ford would need to go further to consolidate its core products. "In my expectation, one other passenger-car factory will have to close," he said.