Anger at Peugeot decision to quit Britain

Anger at Peugeot decision to quit Britain

· Unions blame weak labour laws for loss of 2,300 jobs
· Workers hear of closure on the news before being told

Mark Milner and Paul Lewis
Wednesday April 19, 2006
The Guardian

Britain’s hard-pressed manufacturing base received a new blow yesterday when the French carmaker PSA Peugeot-Citroën said it was pulling out of the UK, closing its Ryton car factory at Coventry in the West Midlands with the loss of 2,300 jobs.

The news, which threatens to raise the political temperature just ahead of next month’s local government elections, was received with dismay by the trade unions and local business leaders. Workers are expected to hold mass meetings later today.

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 €255m (£175m) 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.

PSA said the closure would take place in two stages, with one of the plant’s two remaining shifts being halted later this year and the final shutdown taking place no later than the middle of 2007. Employment at the plant has already fallen from a recent peak of almost 4,000 in 2003 as the plant progressively switched from four shifts to two.

Ryton’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 yesterday’s announcement came within only a few 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. Production at Ryton is understood to cost some €450 per car more than at PSA’s plant at Poissy in France and almost €1,000 above the production cost at its joint venture factory with Toyota in the Czech Republic. PSA is also expected to begin production of the Peugeot 207 at a plant in Slovakia later this year.

Derek Simpson, general secretary of 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 & General Workers’ Union, was equally critical. "This ’leave it all to the market’ madness has massacred manufacturing in this country but if our government really believes that manufacturing matters to the UK it has a duty to remind companies like Peugeot that they have responsibilities to 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 Duncan, the shadow trade and industry secretary, said the job losses reflected on the government’s handling of the economy. "There are signs that the long-term drivers of prosperity are weakening," he said. "The loss of our competitive edge is a continuing corrosive process, which threatens our economic well-being in the long term."

Alan Johnson, the 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".

He said the government, which had offered the company more than £14m in 2004 towards the cost of modernising the plant, would bring together the regional development and training agencies to help workers retrain and find new jobs.

A government spokesman 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, with employment touching 75%, one of the lowest unemployment rates in Europe and redundancies at close to record lows. Our flexible labour market is one of the reasons we have recently attracted record levels of inward investment."

Jim Cunningham, the Labour MP for Coventry South, said the closure would have a significant impact on the local economy. "This is a bitter pill for the labour force to swallow because they have improved productivity while industrial relations have been very good. The company appears to be investing in eastern Europe rather than the UK."

As workers left the plant after having been told the news some expressed their anger at the decision. "I’m just mad at the way they decided to tell us," said Hyacynth Hayman, 42, from Coventry, who 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 but what can you do?"

Like most workers, 40-year-old Mark Giles from Walsall, a general operator at the factory, heard the announcement on the news before arriving at work and was angry at being the last to know. "We’ve done everything for that company. We’ve bent over backwards whenever someone has asked us to adapt. What did we get in return? A stab in the back."

Another worker said that his supervisor announced the decision as "pure economics". He said: "One of the managers said it was simple maths. It costs £11.50 [an hour] to build the 206 here, and about £2.50 to build it in Slovakia.

"It’s a kick in the teeth," said Amo Sanghera, 38, a manual labourer. "It’s taken the wind out of everyone’s sails. I just bought my house two years ago; what can I do about the mortgage payment"?