Ford has announced a radical shake-up of its loss-making European car operations.

The restructuring includes an end to car production at its biggest UK plant, Dagenham, with the loss of 1,900 jobs.

Car production at Dagenham is set to end by 2002.

But the global car giant tried to soften the blow by unveiling a series of other investments in the UK.

Nick Scheele, chairman of Ford Europe, said Dagenham would become Ford’s “global centre” for the production of diesel engines.

Mr Scheele promised to create 500 new jobs at its engine manufacturing operation at Dagenham, albeit over a number of years.

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Ford, he said, would offer its employees the “most generous redundancy packages in UK manufacturing history”.

Struggling car giant

Ford’s European operations have been struggling recently, hit by falling car sales and intense competiton.

The company has capacity to produce 2.25m cars in its European factories, but sold only 1.65m during the past year.

Mr Scheele said sales were not expected to go above 2m, and Dagenham was capable of producing just over 250,000 cars a year – exactly the overcapacity identified by Ford.

The decisive factor for moving production from Dagenham to its Cologne factory was prompted by the fact that facilities there were more flexible, with a second assembly line.

He said the strength of the pound and different employment laws had not played a role in taking the decision.

The world’s second largest carmaker announced earlier this year that it would cut some 1,350 jobs at Dagenham and said further steps might be taken.

The company employs 105,000 people mainly in the UK, Germany, Spain and Belgium.

Dagenham forever

Ford announced plans last year to invest about £500m ($750m) in Dagenham, which includes the car maker’s only high-volume diesel engine plant in the world.

Mr Nasser said: “Dagenham is going to continue forever. Don’t take this as we’re pulling out of Dagenham. We have no intention of doing that at all.”

He also said the shake-up represented a “re-birth” for Dagenham.

His comments came at a news briefing following Ford’s annual shareholder meeting in Atlanta on Thursday.

The jobs blow for Ford workers comes just three days after Rover’s giant Longbridge plant was saved from the brink of extinction when a group of British businessmen bought the loss-making car maker from BMW.

Big losses, below capacity

Ford’s need to shake-up its European operations has been forced by the fact that the division lost $55m last year.

Dagenham’s assembly plant was built in 1931, and has been running far below capacity, producing 191,000 vehicles last year when it was designed to handle 278,000.

Ford builds the Fiesta car and Courier vans there, mainly for customers in the UK and Ireland. The future of the plant had been in doubt for some time.

Prime Minister Tony Blair has pledged the government will do “all it can” to protect jobs at the Ford car factory at Dagenham.