Ford Motor Co said on Thursday it intends to cut as many as 850 jobs in Britain and that it wants to review this year's pay deal with workers.
The layoffs represent nearly 7 per cent of Ford's UK work force of 12,900.
The company said it would trim employment at its transit van plant in Southampton, England by up to 500 through a voluntary separation plan. The plant is now operating less than four shifts per week, the company said.
"Continued non-production days with employees on basic pay are not affordable," Ford said.
Ford also plans to trim 350 other jobs by May in a restructuring of salaried staff. The company said it hoped the cuts could be made throught a voluntary separation program offering lump-sum payments and for senior workers the possibility of retirement on full pension.
Ford said it wanted to re-evaluate this year's pay deal of 5.2 per cent because business had worsened significantly since the raises were negotiated in 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," the company said in a statement. The motor vehicle market in Britain has slumped, with new car registrations down 31 per cent in January compared to a year earlier, the Society of Motor Manufactures and Traders said on Thursday. Last week, Honda shut down its UK production line for four months.