Faltering Peugeot Citroen to cut 2,300 jobs in UK

18th April 2006, Comments 0 comments

LONDON, April 18, 2006 (AFP) - The French car maker PSA Peugeot Citroën said on Tuesday that it planned to close a British car factory near Coventry in 2007 with the loss of 2,300 jobs.

LONDON, April 18, 2006 (AFP) -  The French car maker PSA Peugeot Citroën said on Tuesday that it planned to close a British car factory near Coventry in 2007 with the loss of 2,300 jobs.

The French group said that a study in the first quarter of this year had revealed that the plant suffered from high production and logistical costs at a time of falling demand and increasing competition in Europe.

"The group is unable to justify the investment needed for the production of future vehicules," the company said in a statement.

The factory is located in the West Midlands in central England, the traditional heart of British car manufacturing. The area has been hit hard by the demise of the industry, particularly the collapse of MG Rover in April last year.

PSA said the closure of the factory, which is located in the town of Ryton near Coventry, would be carried out in two phases.

"In the first instance, the factory, which today operates two shifts, moves to a single shift in July 2006, with production not continuing beyond mid 2007," the group said.

"Having presented the proposal to its staff at the plant, the group will now enter into consultation with the trade unions."

In February, PSA Peugeot Citroën had posted a 37.5-percent fall in annual net profit for 2005 and had cited sluggish demand in western Europe and high raw material costs for the faltering performance.

Net profit in 2005 totalled EUR 1.029 billion, down from EUR 1.646 billion in 2004.

Peugeot chief executive Jean-Martin Folz had signalled that the French group intended to shift production to low-cost eastern and central European countries to increase profitability.

"We will need more production capacity in central Europe because we expect European sales to pick up in 2006," Folz had said after presenting the results for 2005.

In its statement on Tuesday, the group said that the "difficult conclusion" to close the plant in Ryton came after a decision to implement "reduced production at a number of other European sites at the end of 2005".

On the Paris stock exchange, shares in PSA were showing a gain of 0.60 percent at EUR 50.35 after showing a loss earlier in the day before the announcement. The CAC-40 index of leading French shares was down 0.25 percent.

Copyright AFP

Subject: French news

 

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