(Adds more reaction in paragraphs 7-10)
By Daniel Morrissey
MANCHESTER, England, Nov 25 (Reuters) - Ford Motor Co is paying an "incredible penalty" for Britain's absence from the European single currency and its UK competitiveness will be hurt if the nation does not join, the auto giant said on Monday.
Ford President and Chief Operating Officer Nick Scheele told Britain's top business conference that every minute Britain delays adopting the euro is hurting the UK-based manufacturing operations of the world's second-largest carmaker.
In a speech to the Confederation of British Industry, Scheele said the economic case for Britain joining the euro is growing more urgent with the country "slipping further and further behind" trade in euro-zone countries.
"At this point every minute of delay in adopting the euro is detrimental to our employees, our business partners, our customers and those people touched by our presence -- as well as to Ford and to many other companies that need a stable and competitive landscape," Scheele said.
"If nothing changes I can only see a steady erosion in the competitive position (of) our British operations over time -- a scenario that will play out with virtually every other company that has exports or has euro-based companies as prime competitors."
Pro-euro business group Britain in Europe said it wholeheartedly supported Scheele's remarks. "It would be good to hear them echoed by the government," said Siemens UK Chief Executive Alan Wood.
Other business leaders at the CBI meeting argued that fundamental differences in Britain's economy threw up barriers to joining the euro. The CBI itself does not have a stance.
"Europe hasn't delivered what it promised to make the euro an attractive option for Britain where we have low inflation, economic stability and our public spending is under control. I see very few benefits in Britain joining the euro," said Steve Hindley, chairman of property and construction firm Midas.
Some bosses of foreign firms said Britain's flexible labour laws made it a more attractive base than continental Europe.
"It's more cost effective to run your business from Britain which has the lowest direct labour costs in Western Europe. Our view on joining the euro is that it's not important to us, and in fact we prefer to stay outside," said John Jeffers, director of U.S. engineering firm Day & Zimmermann.
"ABSOLUTELY INCREDIBLE"
Many businesses complain sterling's strength against the euro makes their exports relatively expensive and that companies within the euro zone enjoy more certainty on exchange rates.
Supporters of the euro pounced on a survey on Monday that showed British firms were more likely to invest in euro-zone countries than in their home market. The poll, carried out by MORI, found 53 percent of those businesses questioned planned to invest in other EU states while only 48 percent intended to expand their operations in Britain.
"The longer we stay isolated, the more we lose," Britain in Europe campaign director Simon Buckby said.
The centre-left Labour government has remained steadfast that it will only be in favour of joining the single currency block if five economic tests it has promised to assess by next June are met. A decision to join is subject to approval in a referendum.
Polls show more than half of Britons want to keep the pound and are reluctant to hand over monetary policy to European currency controllers. Many economists believe public antagonism to monetary union is likely to delay UK entry beyond 2006.
Ford, which accounts for around one third of its European sales in Britain, has not shied away from the political and economic jousting over whether Britain should adopt the euro.
Ford Europe President Martin Leach said last month the company, slashing costs and restructuring operations after a group-wide $5.45 billion loss last year, was basing its forward plans in Europe on Britain joining the euro sometime between 2004-2006.
"Right now, producing in a sterling-based economy and exporting the products to a nation that deals in euros, is the equivalent of paying a tax of about 25 percent -- an absolutely incredible penalty," Scheele said.
The comments by Ford echo those of Japan's Nissan Motor Co and France's PSA Peugeot Citroen .
Nissan has said further investment in its Sunderland plant in north east England is at risk if Britain stays out of the euro. PSA has similar concerns for its Coventry plant in central England. (additional reporting by Anchalee Worrachate and Janet McBride)