A weak dollar has hit sales

The Browns Lane plant employs 2,000 people and is used to finish off XJ saloon cars and XK sports vehicles.

BBC Business Editor Jeff Randall has learned that the closure is certain, and production could move to the US.

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

Huge losses

Everything about the business is being discussed, everything. There is nothing off the table Jim Padilla, chief operating officer, Ford

Jaguar has seen demand for its models drop in the US, a key market, and has been looking at how to reduce costs.

Jaguar has been responsible for huge losses across the company and probably cost Ford more than �100m ($178m) in the second quarter, according to Randall.

"My sources tell me that Brown's Lane is to go. This historic factory will close," he said.

But the company has denied a firm decision has been made.

JAGUAR UK Browns Lane, Coventry: 2,500 workers - trim and assembly of XJ saloon and XK sports-car Castle Bromwich, Birmingham: 2,300 - XJ and XK body production; S-type complete production Halewood, Merseyside: 2,500 - X-Type saloon Whitley Design Centre, Coventry: 2,100 Gaydon, Warwickshire: 3,000 - Jaguar/Land Rover design and engineering centre

"We don't want to discuss speculation," said Don Hume, a spokesman for Jaguar. "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," added Ford's chief operating officer Jim Padilla, speaking in Detroit.

Poor sales for prestige cars

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.

We are happy to talk about any restructuring programme but we are equally happy to fight Tony Murphy, Amicus trade union

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.

Mr Hume said that Browns 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," Mr Padilla said. "But it's a brand under a lot of stress right now."

Radical answer?

Jaguar cars are made at three sites in the UK and all have been producing at less than capacity. The other two plants are at Castle Bromwich, in the West Midlands, and Halewood on Merseyside.

Unfortunately, the speculation is probably closer to the truth than we'd like. There is nothing confirmed, but we are quite fearful that job losses are a possibility T&GW union spokeswoman

Critics say they should be made at one central plant instead, possibly abroad.

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 moved Jaguar production to back in 1950.

Job fears

Workers' representatives said 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," said Tony Murphy, a national officer of manufacturing union Amicus.

"We are happy to talk about any restructuring programme but we are equally happy to fight."

However, a spokeswoman for the Transport & General Workers' Union was less confident of a happy outcome.

"Unfortunately, the speculation is probably closer to the truth than we'd like," she said.

"There is nothing confirmed, but we are quite fearful that job losses are a possibility."

Ford reported a $362m second-quarter pre-tax loss for its Premier group, which includes Jaguar as well as Land Rover, Aston Martin and Volvo models.