The UK government has given Ford £500m in loan guarantees shortly before the US carmaker closes one of its three British factories, with the loss of 1,700 jobs.
UK Export Finance, the government’s trade finance department, gave the £500m guarantee to support a £625m loan by commercial banks to Ford of Britain.
The government last year gave a guarantee of the same size to Jaguar Land Rover.
The aid comes as the UK car industry faces its toughest period, with the coronavirus pandemic wiping out sales and factories being forced to close. The UK is also struggling to secure new investment in its mainly foreign-owned car industry amid Brexit uncertainty.
The government said the loan guarantee would support Ford exports, as well as helping it switch to electric vehicle manufacture, “safeguarding thousands of British jobs” at Ford’s Transit van design centre in Dunton, Essex, and its Dagenham diesel engine plant.
Ford is closing its engine plant in Bridgend, south Wales, in September, with the loss of 1,700 jobs. Unions at the time of the decision described the move as a “betrayal” and raised concerns that some of the work previously undertaken by workers in Bridgend would be moved to a factory in Mexico.
Previously, UK Export Finance’s loan guarantees had to be tied to an individual export contract but the government has changed the rules to allow the guarantees “to support a company’s general export activities”, including investment in new facilities.
The deal was announced by the government’s international trade secretary, Liz Truss, on a visit to Dagenham.
Graham Hoare, the chairman of Ford of Britain, said: “Ford’s manufacturing operations are already an export success story, with around 85% of engines and 100% of transmissions built in the UK exported. This financing will help to maintain Ford as a key UK exporter.”
Ford of Britain’s role as one of the UK’s largest exporters reflects the carmaker’s global supply chain.
Engines made in Dagenham are shipped to Ford’s plant in Turkey where they are put in Transit vans, many of which are then sold back to UK customers. Ford previously assembled the Transit in the UK but it closed its Southampton factory in 2013, ending more than a century of vehicle assembly in Britain.