Peugeot plans to close down Ryton plant in the Midlands |
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Wed, 19 Apr 2006 07:50
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LONDON: French carmaker PSA Peugeot Citroen SA announced Tuesday it is closing down its plant in the Midlands in the U.K. rendering some 2,300 workers jobless. The carmaker, sixth largest in the world and which has been facing slump in sales in its stronghold western European markets, said it is not able to continue investing in the Ryton plant near Coventry.
The company intends to consult trade unions before the closure and said it would provide a support package for staff and try to help as many workers as possible to find alternative employment. The company has been expanding its production facilities in low-cost eastern Europe.
While announcing the plan to close down the plant, the company said the facility suffers from "high production and logistical costs". It said it is forced to take the decision because of these internal factors along with reduced demand and intense competition in Europe.
The plant produces Peugeot's 206 model.
The company said the plant will be closed down in two phases. Initially beginning July 2006, the two working shifts in the plant will be merged into a single shift. It will then slowly phase out production, fully stopping it by mid-2007.
The withdrawal of Peugeot is the latest blow to the British automobile industry, which is facing competition from overseas carmakers and cheaper costs prevailing in emerging markets. The closure of Rover resulted in a loss of 5,000 jobs last year. Earlier, in 2004, U.S. automaker Ford had cut jobs and reduced production in its Jaguar plant in England.
Trade union Amicus said the company is briefing union officials about the plan. It said the decision will have a negative impact on jobs in the West Midlands, which has already been hit by the Rover plant closure.
Amicus' regional officer in the West Midlands Richard O'Brien said some 20,000 blue collar and service sector workers linked to the plant could be affected by the decision.
A spokesperson for prime minister Tony Blair said the department of trade and industry is talking to the company in devising a support and retraining package for the workers likely to be affected by the closure. He denied British manufacturing was in crisis, saying there are more global brands that produce all or a part of their products in the car industry in Britain than in other EU countries.
He cited the example of the collapse of Rover where displaced workers were able to find new jobs relatively quickly with government agency assistance.
Meanwhile, secretary of state for trade and industry Alan Johnson said he was "extremely disappointed" by the decision. He said the government has been offering substantial quality and productivity improvements at Ryton and financial aid for production of future models.
Jean Martin Folz, chief executive of PSA Peugeot Citroen, said the company does not intend to reverse the decision. He defended the company's action in not consulting the U.K. government and trade unions before the announcement, saying, "There was nothing to negotiate and nothing to discuss, it was an economic necessity."
Folz had said last month that the company could not rule out closing western European assembly plants if it felt it could no longer afford the high labour costs.
He said Ryton's high production and logistical costs made it the most expensive of all the company's plants.
A company spokesperson elaborated that the cost of building a 206 at Ryton was 415 euros (287 pounds) higher than at Poissy in France because of higher wages, energy costs and the need to import most of the components from elsewhere. It would cost 255 million euros to upgrade Ryton to the standards of the company's modern plants in the continent.
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