PSA Peugeot to close UK plant

French carmaker PSA Peugeot Citroen plans to close its plant in central England and eliminate 2,300 jobs. 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 UK plant closure in the West Midlands, 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. 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 said 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 ($307 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.