US car giant Ford is expected to tell trade unions on Friday that it will close the historic Coventry factory of its luxury car subsidiary Jaguar, the BBC reported.

The Brown’s Lane plant employs 2,000 people.

Bodies for the XJ sedan and XK sports series are welded and painted at Jaguar’s Castle Bromwich factory and trucked to the Coventry plant for trimming and finishing and then joined to engines made in Wales.

BBC business editor Jeff Randall claimed on the broadcaster’s website that he had learned the closure is certain, and that production could move to the US.

Jaguar reportedly said no decision had been made yet, but said it was considering all possible options.

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The BBC noted that Jaguar has seen demand for its models drop in the US, a key market, and has been looking at how to reduce costs. The brand has been responsible for huge losses across the company and probably cost Ford more than £100 million ($US178m) in the second quarter, according to Randall.

“My sources tell me that Brown’s Lane is to go. This historic factory will close,” Randall reportedly said.

But the company denied to the BBC that that a firm decision has been made.

“We don’t want to discuss speculation,” spokesman Don Hume said. “But we are in the process of developing a plan to secure Jaguar’s long-term future. Nothing has been ruled out and nothing has been ruled in.”

“Everything about the business is being discussed, everything. There is nothing off the table,” Ford’s chief operating officer Jim Padilla told the BBC from Detroit.

The BBC noted that Ford recently mulled the idea of closing its Land Rover plant in Solihull, Birmingham, only to reach agreement with unions on a plan to make it more competitive and safeguard 8,000 jobs.

During those negotiations, Ford management said that they wanted to make Land Rover as competitive as the company’s Jaguar operations within three years, and as competitive as other global car makers within five years, the report added.

Hume reportedly said that Brown’s Lane was “one of Ford’s best plants in terms of quality.” However, demand for the top-of-the-range cars is down, dented by a weak dollar. The firm is having to rethink its strategy as a result, he said.

“I still believe it’s a very strong brand,” Padilla told the BBC. “But it’s a brand under a lot of stress right now.”

Jaguar cars are made at three sites in the UK and all have been producing at less than capacity, the BBC said. The other two plants are at Castle Bromwich, on the outskirts of Birmingham in the West Midlands [XK and XJ bodies; S-type assembly], and Halewood [X-type] on Merseyside near Liverpool.

Critics say they should be made at one central plant instead, possibly abroad, the BBC added, noting that the dollar’s current value against sterling makes it almost impossible to sell Jaguar cars in the US, which accounts for 50% of their market.

The radical answer may be to switch production to the US, a move that would enrage workers at the historical plant where Sir William Lyons founded Jaguar back in the 1950s, the BBC said.

Workers’ representatives told the broadcaster that despite the recent problems they hoped an agreement could be reached.

“Ford would be foolish to contemplate closing a British plant on the back of relatively healthy sales figures,” Tony Murphy, a national officer of manufacturing union Amicus, told the BBC. “We are happy to talk about any restructuring programme but we are equally happy to fight.”

But a spokeswoman for the Transport & General Workers’ Union was less confident of a happy outcome, according to the report.

“Unfortunately, the speculation is probably closer to the truth than we’d like,” she reportedly said. “There is nothing confirmed, but we are quite fearful that job losses are a possibility.”

Ford reported a $362 million second-quarter pre-tax loss for its Premier Automotive Group, which includes Jaguar, Land Rover, Aston Martin and Volvo, the BBC noted.

Separately, the Birmingham Post reported that Jaguar sales of Jaguar cars in Europe have shrugged off the West Midland company’s problems with its US market with registrations year-to-date up 35.1%.

Year-to-date Jaguar has sold 39,970 cars against 29,590 and last month they were up 35.9% at 2,167 against August last year at 1,594, the paper said.

The Post said the downturn for Jaguar due to the strong pound and the weak dollar in its important US market has led to the company taking 15,000 cars out of planned production up to the end of this year with its plants on short-time working.