LONDON: French carmaker PSA Peugeot Citroen plans to close its plant
in the west Midlands and eliminate 2,300 jobs, it said today, dealing
another blow to Britain's fading glory as a carmaking centre.
The world's sixth-largest carmaker, which has been battling with
sluggish sales at its main markets in western Europe, said high costs
meant it could no longer afford to carry on investing in the Ryton
plant near Coventry.
PSA said it would consult trade unions over the closure in Britain's
traditional manufacturing heartland where carmaker MG Rover's
collapse last year cost 5,000 jobs.
The company said it would provide a support package for staff and
would aim to help as many workers as possible find alternative
employment.
Britain's car manufacturing industry has had to contend with fierce
competition from overseas carmakers and cheaper manufacturing costs
in emerging markets.
US automaker Ford, which owns the luxury brand Jaguar, cut jobs and
scaled back production in England in 2004.
PSA, which has been expanding output in low-cost eastern Europe, said
it would close the Ryton plant in two phases. The factory's two
working shifts would move to a single shift in July 2006, with
production halting by mid-2007.
AdvertisementAdvertisementPSA Chief Executive Jean-Martin Folz told
BBC television that Ryton had to close because its distance from
suppliers on the European mainland meant its costs were higher than
those of any other plant in the PSA group.
Modernising the factory to enable it to build a new model would have
cost 250 million euros ($NZ490 million), he said.
"But even after these investments, Ryton would have stayed the most
expensive plant in our organisation," he said.
"This is the only decision we could make. We have been looking at it
from every angle, and there was no way to maintain an economic
production in Ryton," he added.
Built in 1939, the Ryton plant assembles the Peugeot 206 model.
Output totalled 130,000 vehicles in 2005, according to PSA's Web
site.
RYTON RAN OUT OF TIME
PSA shares closed up 0.4 percent at 50.25 euros, outpacing the DJ
Stoxx European car sector index, which slipped 0.5 percent. The stock
has lagged the index by more than 12 percent this year.
Kepler Equities analyst Patrice Solaro said that, while the closure
was expected, it had still come sooner than expected and was
therefore taken as a positive step by Peugeot shareholders. Solaro
has a "buy" rating on Peugeot shares.
A London-based car analyst, who declined to be named, said the Ryton
plant had seemed doomed because PSA had not earmarked any more
investments or products for it beyond the 206 car, whose successor
207 model has already been launched.
The analyst said PSA might have to take a restructuring charge of
less than 100 million euros, but the company said it was too soon to
comment on this.
Professor Garel Rhys, director of the Centre for Automotive Industry
Research at Cardiff Business School, told BBC television that the
future of the Ryton plant had looked uncertain for some time.
"It's very much an assembly operation. They almost just received kits
from the continent and then put them together in the UK. There's very
little actual British content other than the labour and a few
components," he said.
Prime Minister Tony Blair's official spokesman said regional agencies
such as the West Midlands Development Agency and Job Centre Plus were
engaged to provide support and retraining opportunities. The
Department of Trade and Industry was also speaking to PSA.
"We recognise this will be a deep concern to those involved. It is
helpful, however, that there is at least a timescale ... which will
allow some people to begin the process of readjustment," he told
reporters.
Asked if Britain was still sustainable as a manufacturing centre, he
said:
"There are 200,000 jobs in the UK related to the automotive industry.
There are more global brands who produce all or part of their
products in the car industry in this country than in any other EU
country."
Still, a local business leader added that the Ryton closure could
have a devastating effect on the local economy.
"This is a massive blow and signals the end of volume car
manufacturing in Coventry," said Alan Durham, a director of the
Coventry and Warwickshire Chamber of Commerce.
PSA currently has 209,000 staff worldwide, of which 7,500 are based
in Britain, a spokesman said.
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Received on Mon Apr 24 20:11:25 2006
