To do nothing would have jeopardised all our operations in Europe

Nick Scheele, chairman Ford Europe

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.

The British car market accounts for 28% of Ford's total European sales, more than Germany and Spain put together - UK customers will ask the question why, when this is the case, are jobs going at Dagenham?

Bill Morris, TGWU general secretary

Mr Scheele promised to create 500 new jobs at its engine manufacturing operation at Dagenham, albeit over a number of years. However, internal Ford documents obtained by the BBC appear to suggest that some of these 500 jobs are actually just transfers from Ford's other UK operations to Dagenham.

Ford, Mr Scheele said, would offer its employees the "most generous redundancy packages in UK manufacturing history".

But Ford unions reacted angrily to the news.

Tony Woodley of the Transport and General Workers Union said that the unions were "very angry ... in order to be in the car manufacturing business you have to make cars."

Ford restructuring

Cost reductions: $1bn Dagenham car production ends 2002 Plants closed, sold in Portugal, Poland and Belarus Dagenham engine plant: $500m investment Nine new Ford cars every year for five years Employee support programme worth $12m Commercial vehicle engineering moves from US to UK - 360 new jobs

The unions are particularly upset that two years ago Ford had promised further investment in new car production at Dagenham.

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

Tory leader William Hague said the redundancies were "very bad news" for the people involved and their families.

"It's vital that the Government changes its policy towards business," he said.

Struggling car giant

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

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 even the "most optimistic projections" did not see sales go above 2m vehicles a year.

Ford car production in Europe

Mondeo - Genk, Belgium Focus - Saarlouis, Germany Fiesta - Cologne, Germany Ka, Focus - Valencia, Spain

Dagenham is capable of producing just over 250,000 cars a year - exactly the over-capacity identified by Ford.

Over-capacity is a problem for all car makers. Industry expert Peter Wells says that Europe "can produce over 6m more cars than can be sold - equivalent to nine plants of the size of Longbridge".

Ford's reasons

The decisive factor for moving production from Dagenham to its Cologne factory was that facilities there were more flexible, with a second assembly line, enabling Ford to switch to other models quickly.

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

The company employs about 105,000 people in Europe, 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.

Dagenham is going to continue forever - don't take this as we're pulling out of Dagenham

Jac Nasser, Ford chief executive

Earlier, Ford boss Jac 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."

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 Euopean operations lost $55m last year, forcing the shake-up.

Dagenham's assembly plant was built in 1931, and has been running far below capacity, producing 191,000 vehicles last year.

Ford has also cut 2,000 jobs each in Germany and Belgium in the past 18 months. On Friday it also announced the closure or sale of production facilities in Portugal, Poland and at Minsk in Belarus.