News that the assembly of Jaguar cars in Coventry will stop was greeted with dismay last night. But as Motoring Editor Nigel Burton reports, the Coventry plant was living on borrowed time.

FORD'S decision to pull the plug on production at Jaguar's famous Brown's Lane plant, in Coventry, demonstrates once again that there is no longer any room for sentiment in the motor industry.

The factory may be the company's spiritual home - all the great Jags have been made there - but that cut no ice with Ford executives looking to reduce costs in the wake of the poor financial performance of the group's luxury division, the Premier Automotive Group (PAG).

PAG consists of Jaguar, Aston Martin, Volvo and Land Rover. It is supposed to contribute one third of the company's $7bn profit target by the middle of this decade. Instead, the balance sheet is awash with red ink.

Although the Jaguar story began in Blackpool when William Lyons (later Sir William) and William Walmsley founded the Swallow Sidecar Company in 1922, the company is inextricably linked with Coventry.

It started building special bodies for the Austin Seven and the Morris Cowley there in an old munitions factory in 1927. It has been there ever since.

The company moved from that draughty old factory where the only source of heat was hot drinks served from a trolley (a notice on the wall warned: "The service will be withdrawn if employees take advantage of the position and crowd around the trolley") to Daimler's Brown's Lane plant in 1952.

William Lyons needed the spacious plant because UK dealers were being denied enough new cars to satisfy demand.

The factory was gutted by fire in February 1957. At its height, the blaze was so hot that molten lead from the glazing bars and roof flashings ran through the rainwater pipes and filled the drains.

A day later, Lyons walked through the ruins and told the workers: "Jaguar will rise again from these ashes. We'll beat it and we'll become the greatest again."

With the rebuild complete, Brown's Lane went on to manufacture some of the most desirable cars the world has ever seen. The Jaguar E-Type, the XJ saloon and the XJS coupe were all built there. But even then, Jaguar was a company succeeding in spite of itself.

Cash was in constant short supply, the XJS had to be built on a cut-down XJ6 saloon platform to save money (and the F-Type would re-use much of the same chassis 20 years later) and often fractious industrial relations saw to it that Jags became a byword for unreliability.

The fuel crisis of the early 1970s almost wiped the company out, but it survived and appeared to have found the perfect parent when the Thatcher Government approved its sale to Ford in the early 1980s.

Ford has persevered with its most glamorous brand. The launch of the small X-Type saloon was supposed to boost output, but the company felt it could sell enough cars without a diesel model - a costly mistake at a time when drivers were flocking to buy diesel-powered BMWs and Audis.

Falling sales and excess production capacity (Jaguar is capable of making more than 300,000 cars but only made 120,000 this year) convinced Ford executives that drastic action was needed.

Brown's Lane was always the most vulnerable because it had no paint shop - one of the most expensive investments a car manufacturer can make in a car plant.

Its 2,000 workers carry out final assembly of the XK coupe and the flagship XJ. These are prestige models, but together they only sell about 25,000 per year.

About 750 white collar workers and 400 production staff will lose their jobs at Brown's Lane.

The company tried to sweeten the blow by announcing that it would be creating 300 jobs at its Aston Martin plant in nearby Gaydon, but to Jaguar, halting the manufacture of cars at Brown's Lane is like Ford axing the legendary Rouge plant in Dearborn.

Perhaps that is why Jaguar decided that Browns Lane would continue as its headquarters.

Unions warned the decision could still kill off Jaguar - after yesterday's announcement, they should be in no doubt that Ford's executives will not hesitate to pull the trigger if the losses continue.

By taking drastic action now, the company hopes to prevent Jaguar becoming an endangered species in the future.