Ford Motor Co. of Canada Ltd. is laying off 650 people or more than 10 per cent of its work force at engine and engine parts plants in Windsor, Ont., in a move sparked mainly by slow sales of its Freestar minivan.

The indefinite layoffs at five plants begin May 10 and come after several weeks of shutdowns this year at the Oakville, Ont., assembly plant that puts together the Freestar, which has so far not come close to matching the sales levels of its predecessor product, the Windstar minivan.

As Ford Canada was sending out the layoff notices yesterday, bond rating agency Standard & Poor's Corp. warned that "difficult long-term trends will predominate" in the North American automotive market this year, although there will be a slight cyclical jump in overall sales.

The key trend is excess production capacity, which has caused a fierce battle for market share that has bloodied auto makers' bottom lines -- particularly Ford and its Detroit-based rivals DaimlerChrysler Corp. and General Motors Corp. -- but has provided great deals for consumers, such as interest-free loans for up to five years and thousands of dollars in cash rebates.

One of the segments where competition is most frenzied is minivans, where Toyota Motor Corp. and Nissan Motor Co. Ltd. have highly successful redesigned vehicles. Chrysler group has also just introduced a redesign of its flagship vehicles with new second- and third-row fold-down seats that it says push it ahead of its rivals.

"Minivan sales are expected to be flat this year," said Lauren More, a spokeswoman for Ford Canada.

In the first two months of 2004, Ford Motor Co. has sold just 14,500 minivans in the U.S. market, which is the destination for the vast majority of the vehicles, compared with 24,900 Windstar models in January and February of 2003.

The layoffs at Ford Canada's 5,800-employee Windsor operations start with the elimination of one shift of production of V-6 engines for the Freestar at the Essex Engine Plant. A shift of V-8 engine production is also being eliminated. That affects other Windsor plants that make castings for engines, such as aluminum engine blocks.

Production of a new line of V-8 engines will be added at the Windsor Engine Plant and V-10 production at another plant but those additions don't make up for the losses elsewhere.

Workers at all five plants are affected because so-called bumping rights allow people at one plant with more seniority than those at other plants in the city to bump workers with lower seniority out of jobs.

"The frustrating part I guess for us was, up until this point, there's been just nothing but speculation and rumours and all that uncertainty in the environment that has caused so many people anguish," said Mike Vince, president of Canadian Auto Workers local 2000, which represents Ford's hourly workers in Windsor.

The layoffs will cause cuts at other businesses in Windsor, Mr. Vince said.

"There's about seven to 7.5 spinoff jobs that are directly related to the auto jobs."