Ford has confirmed it is consulting with unions about the potential closure of the Bridgend engine plant in South Wales.
The manufacturer says the closure at the plant, which employs 1,700 people and opened in 1977, was a necessary step to support the organisational restructure of the company.
It announced last month that it was cutting around 7,000 jobs worldwide, including an unconfirmed number in the UK, as part of the restructure due to the declining demand for cars and the shift to electric vehicles.
The cuts represent 10% of its global workforce and 20% of its management positions, including marketing and communications. They are expected to save the company £471 million a year.
In Bridgend, 400 of the 1,700 employees had already signed up to a voluntary redundancy earlier this year and will leave between May and December 2019.
“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,” said Stuart Rowley, president of Ford of Europe.
“We are committed to the UK, 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.”
Factors behind the proposed closure of Bridgend include significant underutilisation of the plant, driven by the impending end of engine production for Jaguar Land Rover, the cessation of the previous generation Ford GTDi 1.5-litre engine, and reduced global demand for the new generation Ford GTDi and Pfi 1.5-litre engine.
At expected volumes, the plant also faces a cost disadvantage compared with other Ford facilities building the same engine. Significant efforts to identify new opportunities have not been successful, it said.
It is proposed that production of the new generation Ford 1.5-litre engine will end at the Bridgend facility in February 2020, with manufacture of the engines supplied to Jaguar Land Rover ceasing in September 2020, when it is proposed that Bridgend will close.
As part of its proposals, Ford also has provided details of a plan with an enhanced programme for Bridgend employees. This includes helping employees with redeployment opportunities to other Ford sites in the UK and assisting with domestic relocation where possible, or supporting them to find new employers or pursue new opportunities, such as creating their own businesses or training for new careers.
“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,” said Rowley.
“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.”
Ford currently expects to record pre-tax special item charges of about $650 million in relation to the proposed closure of Bridgend.
Approximately $400 million of the charges would be paid in cash and are primarily attributable to separation and termination payments for employees. Non-cash charges of approximately $250 million include pension expense and accelerated depreciation and amortization.
Most of the pre-tax special item charges would be recorded in 2019, with the cash outflows occurring in 2020, and are part of the $11 billion in EBIT charges with cash-related effects of $7 billion the company expects to take in the redesign of its global business.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said: “Today’s announcement is another crushing blow for UK automotive manufacturing and, especially, the staff and their families in and around Bridgend.
"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.”
Ford says it will continue to produce diesel engines at the Dagenham Engine Plant in east London, and transmissions at the Halewood Getrag Ford Transmissions joint venture on Merseyside.