/ 21 April 2006

Peugeot quits UK, angering workers

Britain’s hard-pressed manufacturing base received a new blow on Tuesday when French car-maker PSA Peugeot-Citroën said it was pulling out of the United Kingdom, closing its Ryton car factory at Coventry in the West Midlands with the loss of 2 300 jobs. The news was received with dismay by trade unions and local business leaders.

PSA Peugeot-Citroën said it had decided to close the plant because of its high production and logistical costs, which meant it could not justify the â,¬255million investment required to bring in new models to replace the Peugeot 206, which is currently built there.

”These internal factors, together with reduced demand and intense competition in Europe, have led the group to come to this difficult conclusion, having already reduced production at a number of other European sites at the end of 2005,” the company said in a statement.

The Ryton factory’s demise is the latest in a series of high-profile closures within the British car industry in recent years. Ford has halted car production at Dagenham; General Motors has closed the Vauxhall car plant in Europe; Jaguar production at Browns Lane in Coventry has been halted and this latest announcement came within days of the first anniversary of the collapse of MG Rover.

Though PSA made it clear that its decision was based on factors specifically related to Ryton, including its dependence on a high level of imported components and export sales, the closure is likely to add to worries about British jobs being exported to countries with lower-cost production. PSA is expected to begin production of the Peugeot 207 at a plant in Slovakia later this year.

Derek Simpson, general secretary of union Amicus, reacted angrily to the news. ”This is disastrous news for British manufacturing. It is inconceivable that workers in France would be laid off on this scale. Weak UK labour laws are allowing British workers to be sacrificed at the expense of a flexible labour market,” he said.

Tony Woodley, general secretary of the Transport and General Workers’ Union, was equally critical. ”This ‘leave it all to the market’ madness has massacred manufacturing in this country.” The local chamber of commerce described the closure as ”a massive blow” and said it signalled the end of volume car manufacturing in Coventry.

Alan Johnson, the UK Trade and Industry Secretary, said he was ”extremely disappointed that Peugeot has decided to end manufacturing at Ryton, particularly given the substantial quality and productivity improvements the workforce has delivered in recent years”. The government had offered the company more than £14million in 2004 towards the cost of modernising the plant and helping workers retrain and find new jobs.

A government spokesperson rejected the argument that Britain’s problems were caused by its labour market flexibility. ”If it were true, the UK would have high levels of unemployment and poor job retention in comparison to other EU countries. We have neither. Our flexible labour market is one of the reasons we have recently attracted record levels of inward investment.”

Like most workers, Hyacynth Hayman (42) heard the announcement on the news before arriving at work and was angry at being the last to know. ”I’m just mad at the way they decided to tell us,” she said. Hayman works in the factory’s paint shop with her husband and son. ”For us, this was always a family business. With all three of us losing our jobs, it’s just disastrous.”

Garel Rhys, emeritus professor at Cardiff University’s business school, acknowledged that the industry had taken a number of severe blows, but pointed to the success of BMW’s Mini production and that of the Japanese manufacturers in the country. — Â