Union leaders have urged the government to join the euro after plans were revealed to shut a tractor factory with the loss of 1,000 jobs

The US-based owners of Coventry's historic Massey Ferguson tractor plant said one of the reasons they were closing the site was to switch production to a factory in France.

Parent company Agco said the euro currency would help "improve their competitive position" as well as blaming fierce competition for the move.

Now a regional union representative said the closure has "raised fears about the future of manufacturing in the UK".

If we had been in the euro two years ago we would be in a better position now

Tom Keogh, Amicus union

Robert Ratliff, president and chairman of Agco, said: "The cost position here in the UK in the last three years compared with competitors producing the same product in Europe is a lot higher.

"These firms bring their goods into the UK at a lower cost than what we can produce here."

The main union representing workers at the plant, Amicus, said it had been "complaining bitterly" for the last two years about the euro.

Regional organiser Tom Keogh told BBC News Online: "If we had been in the euro two years ago we would be in a better position now.

Market recession

"Senior managers at the company have been stating quite clearly their sole intention to deal in euro.

"It makes me worried about the future of manufacturing in the UK. The quicker we get into the euro, the better."

Carl Pearson, assistant director of regeneration at Coventry City Council, said: "The euro is one of several reasons behind this decision but the whole agricultural market has been in recession for some time.

"About 80% of Massey Ferguson's production is for export.

"Those goods are priced in sterling, which is a strong currency, so it's not surprising that this can lead to disadvantages against countries in the euro zone."

The redundancies will be made over the next year as the Banner Lane plant - which is the biggest tractor factory in the world - is run down.

The Coventry site represents the largest factory in the Agco Corporation with peak production reaching 28,000 tractors a year.

'Cost reductions'

However it has struggled against intense foreign competition and has shed hundreds of jobs in recent years.

The high horse power tractors produced in Coventry will now be made in Beauvais, near Paris.

Mr Keogh added: "The mood is one of shock and anger.

"Today we had a meeting with the chief executive to ask how much more money was going to be put into the business and then we were hit with this bombshell."

Tractor production at the Coventry assembly plant will cease by the end of the year and transaxle production will finish by June 2003.

The closure and the Europe-wide rationalisation of the company is expected to save Agco up to $25m by the year 2004.

Appeal to government

The majority of the costs of closing the factory are expected to be recouped by selling the Coventry site.

Coventry South MP Jim Cunningham said he would appeal to Trade and Industry Secretary Patricia Hewitt for help in keeping the factory open.

"Coventry cannot afford to lose this many jobs.

"I will be writing to the Secretary of State for Trade and Industry to ask for her assistance in keeping the plant open."

Agco is the world's third largest manufacturer of farm machinery with sales of $2.5bn in 2001.

The Coventry site's office will remain as the corporation's headquarters.