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PSA Peugeot Citroen To Close UK Ryton Plant Losing 2,300 Jobs; & Union Vows to Fight

Wed, 04/19/2006 - 3:37am
Nancy Syverson

From CNN.com

Unions have condemned plans by French car maker PSA Peugeot Citroen to close its plant in central England with the loss of 2,300 jobs and vowed on Wednesday to fight to have the decision reversed.

The world's sixth-largest car maker, which has been battling with sluggish sales at its main markets in western Europe, said on Tuesday it could no longer afford to carry on investing in the Ryton plant near Coventry due to high costs.

The decision to close the plant in the West Midlands, Britain's traditional manufacturing heartland, follows last year's collapse of MG Rover which cost 5,000 jobs.

The company said it would consult trade unions and provide a support package for staff with the aim of helping as many workers as possible find alternative employment.

But union leaders, who are to meet government ministers on Wednesday, said they wanted the closure plans reversed, and called the company's actions "callous" and "absent of any social responsibility".

"Make no mistake, we will be looking, as a matter of the utmost urgency, to explore with the company as well as with ministers ways to have this devastating decision reversed," said Tony Woodley, general secretary of the Transport and General Workers Union.

He also attacked the government for what he described as a policy of "leave it all to the market madness" which had "massacred" UK manufacturing by making it easier and cheaper to sack workers in Britain.

"It's fascinating that ... the French company is actually retracting back into France, which is a heavily-regulated regime compared to ours, and ours which has got this so called free and easy market seems to be losing the jobs," Derek Simpson, general secretary of the Amicus union, told BBC radio.

The government, which had offered Peugeot a 14 million pound ($25 million) grant in 2004 to redevelop the plant, said it was "extremely disappointed" by the news.

"We offered them the maximum that could be possibly legally be offered under EU state aid rules to get a plant in for the replacement to the Peugeot 206," Trade and Industry Secretary Alan Johnson told BBC radio.

He denied it was quicker to get rid of British jobs than those elsewhere in Europe.

"We have introduced protection which we did not have before... it's getting the balance right between protecting workers and creating a situation where it's so difficult to shed jobs that companies don't invest in the first place," he said.

Britain's car manufacturing industry has had to contend with fierce competition from overseas car makers and cheaper manufacturing costs in emerging markets.

U.S. 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.

PSA Chief Executive Jean-Martin Folz told BBC television 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.

Modernizing the factory to enable it to build a new model would have cost 250 million euros ($307 million) and closing the plant was the only viable economic decision, he said.

"Even after these investments, Ryton would have stayed the most expensive plant in our organization," he said.

Built in 1939, the Ryton plant assembles the Peugeot 206 model. Output totaled 130,000 vehicles in 2005, according to PSA's Web site.

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