Production of engines for Jaguar Land Rover at the Ford Engine plant in Bridgend will stop three months earlier than had been expected.
Ford has confirmed that its contract to supply JLR with petrol engines will cease in September 2020.
The company said that it was disappointing news but that it was looking at new business opportunities.
Half of the workforce of 1,930 at Bridgend work on that engine.
The plant has won investment of £100m to make the next generation of engines, called the Dragon, for Ford cars.
Originally it was a cash injection of £181m but that was reduced to £125m in September 2016.
In line with that, the planned number of Dragon engines was cut from 250,000 a year to 125,000.
At the moment Ford Bridgend makes half a million engines a year for Ford cars and a quarter of a million for JLR.
After 2020 the number of engines being made on the site will be just a quarter of present production levels.
Ford said it was not giving any detail as yet of how the workforce will be run down as it is in consultation with unions.
A spokesman said it would “continue to look at other high technology opportunities for Bridgend in the future.”
Last month, the workforce voted for industrial action over concerns about the plant’s future.
JLR said: “Ford has been, and remains, an important strategic supplier to Jaguar Land Rover under an agreement which was negotiated to support our business until the end of the decade.”
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