America's second biggest car maker today suffered its heaviest loss in four years as it undertakes a costly restructuring programme.

Ford, which is closing 14 plants and axing up to 30,000 factory jobs in North America, reported a first quarter pre-tax loss of $1.19bn (£670m), compared with a profit of $1.21bn a year ago.

Ford's worst quarterly performance since the fourth quarter of 2001 included pre-tax costs of $1.7bn associated with its Way Forward restructuring plan. The one-off charge includes the costs of layoffs and redundancy packages.

The company's hard-pressed North American business automotive unit, which has been struggling with declining sales and high fixed costs, reported a pre-tax loss of $2.9bn. Worldwide, Ford lost $2.7bn before tax.

Bill Ford, chairman and chief executive, said: "While we are not satisfied with our performance, particularly a loss in North America automotive, we are encouraged by the success in our global operations and at the Ford Motor Credit Company.

"We have said we intend to restore automotive profitability in North America by no later than 2008 and we remain committed to deliver on our promise."

Ford and its rival General Motors, which reported a $323m quarterly loss yesterday, have been squeezed by intense competition from Toyota and other Asian manufacturers and the declining popularity of profitable sport utility vehicles.

Both companies have been struggling with high fixed costs for wages and benefits and a cut in their credit ratings to "junk" status.

"This transformation isn't going to be quick and it isn't going to be painless. It will involve risks - and the financial rewards will not be immediate," Mr Ford said. "But in the end, I believe we'll get there."