The UK car industry today sustained another blow as the French car giant Peugeot Citroën announced the closure of its Coventry plant, putting 2,300 jobs at risk.
The factory at Ryton in Coventry will stop making the Peugeot 206 model next year. The world's sixth largest carmaker, struggling with sluggish sales in its main markets in western Europe, said high costs meant it could no longer afford to carry on investing in the plant.
Peugeot Citroën is to close down the factory in two phases: firstly, its two working shifts will switch to a single shift in July 2006; production will then stop outright in the middle of next year.
Thousands of other jobs depend on the Ryton factory and the decision is yet another blow to the car industry in the West Midlands following last year's collapse of MG Rover.
Jean Martin Folz, the chief executive officer of PSA Peugeot Citroën, made the official announcement as union officials were summoned to a meeting.
He said the plan followed a detailed study by Peugeot Citroën that had "clearly confirmed the weaknesses for the Ryton plant".
The company blamed high production and logistical costs, which meant that it was unable to justify the investment needed for the production of future vehicles.
"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.
Union officials said they had been fearing bad news but expressed shock at the scale of the announcement.
Derek Simpson, the general secretary of the Amicus union, said: "This is disastrous news for British manufacturing. It is inconceivable that workers in France would be laid off on this scale."
The union said there would be an "enormous" impact on the local economy, estimating that every job at Ryton sustained another three in service firms.
Sales of the 206 model peaked at almost 660,000 in Western Europe in 2001, reaching 424,000 last year and 62,000 in January and February of this year.
In the UK, sales peaked at 102,000 in 2002, falling to 96,000 a year later, 87,000 in 2004, 68,000 last year and 5,500 in the first two months of this year.
Peugeot Citroën's move marks the latest blow to Britain's car industry. The collapse of MG Rover last year cost 5,000 jobs, while the US car maker Ford, the owner of Jaguar, has also cut jobs and scaled back production in England.
Peugeot Citroën said it will work closely with unions and the government to provide a comprehensive support package for its staff and to help as many as possible to find other work.
