More gloom for UK automotive sector

The car industry has suffered further blows as Ford faced the threat of industrial action over plans to axe 850 UK jobs and freeze pay, while new car sales slumped by almost a third. A business leader described the current situation as "an extreme and frightening rollercoaster".

Ford's Transit van plant in Southampton will be hardest hit, with 400-500 jobs set to be lost by May, and a further 350 posts cut across the company through a restructuring of salaried staff.

Ford also announced that it wanted to "re-evaluate" this year's pay deal of 5.2 per cent, saying that its business situation had worsened significantly since the agreement was drawn up last October.

"Such a serious step would not normally be contemplated but in the unprecedented circumstances the priority is to ensure a sustainable Ford Motor Company," said the firm.

The Unite trade union condemned the announcement as a "betrayal" and warned it would ballot for industrial action unless the plans were reconsidered.

The row blew up as the Society of Motor Manufacturers and Traders reported that 112,087 new cars were registered in January, the lowest January figure since 1974 and a fall of 30.9 per cent compared with a year ago.

The SMMT stepped up its call for the government to offer financial aid to owners of older cars to help them buy newer models under a so-called scrappage incentive scheme.

David Smith, chief executive of Jaguar Land Rover, has said the need for government help is urgent.

Smith told the manufacturing dinner of the CBI in Birmingham: "Few businesses go through more dramatic financial rollercoasters than the car business and right now this is the most extreme and frightening rollercoaster I've ever been on."

Mr Smith said someone needed to put "oil back into the engine" of the industry, stressing that firms wanted access to short-term loans or loan guarantees to keep the wheels turning during a "once-in-a-century" economic recession.

Speaking alongside Business Secretary Lord Mandelson, Mr Smith said: "I am pleased to see that in recent weeks the government has recognised this need and is prepared to take action, but we need it quickly and urgently to help manufacturing industry over the next few months.

"I know the Secretary of State has asked his department to investigate further ways and means of stimulating demand and to move to execute his plan with utmost urgency. It would now be a tragedy were the aid package not to be delivered in time to avert the industrial consequences of another quarter like this one."

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