FORD has confirmed that it is looking into the potential closure of its Bridgend engine plant in South Wales by late 2020, putting 1,700 jobs at risk.
In a statement released at lunchtime today, Stuart Rowley, president of Ford of Europe, said keeping Bridgend open was “economically unsustainable” due to “significant underutilisation” of the plant, calling the move a “necessary step to support Ford’s global business redesign”.
The Bridgend plant manufactures engines for the Fiesta, Focus, Kuga, Mondeo, S-Max and Galaxy models, but reduced global demand for the new generation GTDi and Pfi 1.5-litre engines has put Bridgend at a cost disadvantage compared with other Ford facilities, Ford said.
Compounding matters, Ford also manufactures large V8 engines for Jaguar Land Rover at Bridgend, but JLR has previously announced the end of that contract from September 2020.
Ford is now looking to cease production of the new generation Ford 1.5-litre engine in February 2020, with the closure of the plant following the termination of the JLR contract.
“Creating a strong and sustainable Ford business in Europe requires us to make some difficult decisions, including the need to scale our global engine manufacturing footprint to best serve our future vehicle portfolio,” he said.
“We are committed to the U.K.; however, 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.”
Ford says it has provided details of a comprehensive plan to help employees find new roles at other Ford sites in the U.K., including assistance to relocate their homes, or support them to find new careers elsewhere.
“As a major employer in the U.K. for more than a century, we know that closing Bridgend would be difficult for many of our employees. We recognise the effects it would have on their families and the communities where they live and, as a responsible employer, we are proposing a plan that would help to ease the impact.”
Yesterday, union bossed were summoned to a meeting scheduled for this morning, leading to speculation about the closure of the factory. Opened in 1977, Bridgend currently employs 1,700 workers, with 400 already signed up for voluntary redundancy and departing this year, according to a spokesperson.
Bridgend has been under threat due to the falling demand for the engines it makes. Staff had been threatening to strike amid fears of compulsory redundancies.
Ford has a second engine plant in Dagenham, which currently employs 1,830 directly working on diesel engine production, with a further 1,050 in transport operations and general services. The company’s engine plants worldwide are located in the U.S., Romania, China, Canada, Germany, Mexico, South Africa, Spain and Turkey.
According to the Society of Motor Manufacturers and Traders, manufacturers including Bentley, BMW, Ford, Honda, Jaguar Land Rover and Toyota produce 10,500 engines per day in the UK, of which 5,750 are exported worldwide.
This is a turbulent time for the automotive industry. Last month Honda confirmed that it will close its Swindon car plant in 2021, shifting production to its Japanese factories. Japan entered a free-trade agreement with the EU earlier this year, meaning vehicles produced in Honda’s home market can be exported to Europe tariff-free.
In March, MINI owner BMW reiterated that its Cowley factory may need to close if Britain leaves the European Union without a deal, putting 4,500 jobs on the line.
A BMW spokesperson had previously said that Brexit uncertainty “is not helpful when it comes to making long-term business decisions” and that what was important for the company was that the UK’s negotiations with the EU result in “uncomplicated, tariff-free access to the EU single market in future.”
In May 2017, BMW chief executive Harald Krueger said the company had to remain “flexible” about production facilities.
In addition, Nissan has reversed a decision to build the X-Trail SUV at its plant in Sunderland. Although it cited a number of business reasons for its decision, including the global drop in demand for diesel engines, Nissan’s Europe chairman, Gianluca de Ficchy, said “the continued uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future.”
Earlier this year, Mike Hawes, chief executive officer of the Society of Manufacturers and Traders, said the UK automotive industry is on “red alert”.
“Today’s announcement is another crushing blow for UK automotive manufacturing and, especially, the staff and their families in and around Bridgend,” he said.
“Ford’s challenges are not unique: economic uncertainty at home and abroad, technological change and global trade issues are stressing markets and forcing companies to review operations and make difficult decisions.
“Success in this fiercely competitive global industry, however, starts at home and we hope that all efforts will be made over the coming weeks to restore confidence, bolster demand and ensure there is long term competitiveness for this crucial sector.”
At the end of last month, the SMMT reported that British car plants produced 44.5% fewer cars in April than they did in the same month last year; down from 127,970 cars in April 2018 to 70.971 last month.
The sharp drop is being attributed to a series of temporary factory shutdowns, which were scheduled to coincide with the UK’s original departure date from the European Union on March 29 this year, and reduce the impact any no-deal disruption would have caused.
Due to the costs involved with these contingency measures, the SMMT claims the factory shutdowns “cannot now be repeated” should British car makers face the prospect of another no-deal scenario on October 31.
Speaking of the Ford Bridgend closure, Richard Gane, director and automotive sector specialist at management consultancy Vendigital, said:
“This is dire news for the UK automotive industry and will have a knock-on effect across the domestic supply chain.”
He added: “For plants producing petrol or diesel engines, there is an urgent need to make adjustments by decreasing production capacity whilst investing in new areas of production such as electric engines, motors and batteries.
“Many global OEMs are struggling to re-balance their business models in a shifting climate and while sales of plug-in EVs are up, they still only represent just over 3% of total European new car sales – they are not yet a mainstream alternative to combustion-engine vehicles.”