FRANKFURT - Ford Motor Co announced further production stoppages at its European operations and warned of more possible cuts ahead as it tries to combat a sharp decline in demand.

Ford of Europe must return to sustainable profitability as soon as possible. We will do whatever it takes to ensure the continuing viability of our business, and further actions can be expected, said John Fleming, Ford's head of the region.

The company said it would drop one of the three shifts at its Spanish plant in Valencia -- which builds the Fiesta subcompact and Focus hatchback and employs 5,000 -- starting May 1.

A spokesman said talks with its labour representatives in Spain were ongoing so Ford could not say exactly how many workers would see their jobs cut.

Ford will add a new 2.0-litre EcoBoost petrol engine to the site's powertrain production later this year and replace its Focus volume with the next generation of the C-MAX van, which it will pull from its Saarlouis factory in Germany.

It is also considering a second European site for a derivative of the coming Focus successor.

Saarlouis, which will remain lead plant for the next Focus but will also lose the next Kuga compact SUV to an undecided site, remains partly idled for the meantime after it effectively went to a four-day work week for the first half of this year.

The current labour level will be reviewed on a regular basis to determine if it is sustainable, a Ford statement said.

The carmaker also has major vehicle manufacturing sites in Belgium's Genk as well as in the German city of Cologne.

THIRD OF FORD STAFF IN EUROPE

Ford of Europe sales declined 7.4 percent in 2008 to 1.44 million vehicles in the combined markets of western Europe, the Baltics as well as Czech Republic, Poland and Hungary. This accelerated to 19 percent in the first two months of 2009 although it predicts it will gain market share.

The single largest volume is generated in Britain, which alone contributed about 400,000 units of sales last year, followed by Germany as a distant second with roughly 240,000.

Last year's 30 percent appreciation in the euro versus the pound has caused significant problems for virtually all carmakers that produce on the continent.

Ford makes only the Transit delivery van in its Southampton, UK plant, although it does have significant engine assembly operations in South Wales and in Dagenham.

In spite of the weak pound and a $330 million pretax loss in the final quarter of 2008, Ford of Europe remained one of the few bright spots in the group with an annual profit of $1.06 billion before tax last year.

This marked the fourth consecutive annual improvement and the first time it posted a profit over $1 billion since 1989.

Thanks to the continued shrinking of Ford's U.S. market share, the group employs almost as many people in Europe -- roughly 70,000 -- as it does in North America.

(Reporting by Christiaan Hetzner; editing by Simon Jessop)

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