Ford on Thursday reportedly said it had not ruled out plant closure at its UK-based Jaguar operations as it prepares a restructuring plan for the troubled luxury car unit and its 10,000-strong British workforce.

According to the Financial Times (FT), the loss of any of Jaguar’s three UK plants would be an embarrassment for the British government, which worked hard to encourage Ford to invest in new facilities in the West Midlands and Merseyside to compensate for the loss of other local manufacturing jobs.

Don Leclair, chief financial officer, told the paper Ford was working on a restructuring for Jaguar, hit by surprise losses in the second quarter on a sharp drop in sales in the US – its biggest market.

Leclair reportedly said there would be “fundamental, but not extensive, changes” at Jaguar. Asked whether this could include closure of any UK plants, he said: “Everything’s on the table. We are looking at the whole business and we’ll get it right.”

As part of the restructuring, Ford is to cut production at Jaguar’s UK plants. Unions have been told that all three of the company’s UK plants are likely to be affected. The precise level of cuts, and how they will be implemented, would be determined in the next few days, a UK-based official told the FT.

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The paper said Jaguar has suffered because its manufacturing operations are sterling-based but its biggest market is the US and the dollar is weak against British currency.

Sales have also been suffering because of slow demand for its new XJ saloon amid a fierce price war between premium marques in the US, the FT added. Jaguar’s US sales in July were 24% down on 12 months earlier. In Europe, it has suffered from sales being concentrated on its smaller, less profitable cars, with diesel models unavailable until recently.

Leclair reportedly said in an interview in New York that Jaguar’s main problem was its sales performance rather than costs, but the reason for disappointing sales remained a mystery. “One reason sales have been slow is because we have not launched the long-wheel base version [of the XJ in the US],” he said. “We are still trying to understand what else is going on.”

The Financial Times noted that the ‘small’ Jaguar, the X-Type, is built at Halewood on Merseyside, while the S-Type is built at Castle Bromwich, Birmingham and XJ saloons and XK sports cars at Brown’s Lane in Coventry.

Although global sales are running 11% higher than a year ago, the 125,000 Jaguar cars sold last year fell well below expectations. Ford had projected that Jaguar would earn $US500 million (£275 million) this year, but now expects it barely to break even, the Financial Times (FT) said.