LONDON, Feb 5 (Reuters) - Ford UK is to cut around 850 jobs by May and review its previously agreed pay offer as it grapples with the economic impact hitting the car industry, it said on Thursday.
The company, which employs some 12,900 people in Britain, said it would open a voluntary redundancy programme in the southern city of Southampton for staff on salaries and hourly contracts, with up to 500 employees expected to leave.
Another 350 are expected to leave across the company.
Industry figures released on Thursday showed that new car sales in Britain fell by almost a third year on year in January, registering their worst performance for that month since 1974. [ID:nL521854]
"As demand across the industry continues to fall, we are facing some immediate and major challenges which require us to take decisive action to reduce all our costs," Ford of Europe Chairman and Chief Executive John Fleming said in a statement.
He said they were looking to act in a way "which will best protect our business for the long term and ensure that we are well positioned to be among the winners when recovery does come."
Ford said it had been forced to act as the Southampton Plant was currently operating on less than four shifts a week while employees were on basic pay, which was not affordable.
It said it would also address with unions the pay negotiations which were agreed in October of 2008 when they agreed a 5.25 percent first-year increase to reflect the high inflation rate.
"Conserving cash is the single most important task confronting the company," it said. "In this difficult situation, the company has discussed with union representatives the need to re-evaluate the pay offer in the light of the present and continuing business conditions.
"Such a serious step would not normally be contemplated but in the unprecedented circumstances the priority is to ensure a sustainable Ford Motor Company (F.N)."
The GMB union said in a statement it opposed both the job losses and pay freeze.
"Ford of Europe made a profit in excess of 1 billion pounds in 2008," GMB organiser Justin Bowden said. "The pay offer reflects last year's rate of inflation and the massive contribution to that profit by the UK Ford workers."
Ford joins a growing list of companies which have cut jobs in Britain in recent months. [ID:nLR635225] (Reporting by Kate Holton; Editing by Jon Loades-Carter)