Massey Ferguson’s tractor manufacturing plant in Coventry could face closure unless Britain commits itself to the euro.

Owners Agco have warned that the Banner Lane plant could shut with the loss of nearly 2,000 jobs if the pound remains at a high level.

Chairman Robert Ratliff said in the Financial Times:

"The strong pound is not favouring our continued [manufacturing] presence in the UK." 

Agco has run the plant since 1994 when it bought the factory from Varity of the US.

The factory has made tractors since 1946 and employs 1,800 people and is one of the most famous names in the world for tractors. 

The plant has the capacity to make 25,000 tractors a year. Last year it made 14,000, which still kept it as one of the biggest producers in Europe.

Mr Ratliff said that if the pound remained strong, Agco might be forced to repeat cost-cutting measures similar to those taken in the USA recently, when two plants were shut.

He said:

"Our annual savings are expected to be in excess of $20m (£13.3m) after these plants are fully closed and the nearly 1,000 employees terminated. I am hopeful we are not forced into the same type of action in the UK.”

Margins at the Coventry plant, which exports more than 70 per cent of its production, have been under pressure for the past three years since the pound began its rise against other European currencies. 

The company is already looking for suppliers from mainland Europe to offset the strength of the pound.

Mr Ratliff warned: