PSA Cancels C4 Cactus Shift at Madrid; 470 Jobs Lost

MADRID – PSA Group eliminates one of two shifts at its Madrid assembly plant, idling 470 workers in response to slow sales of its Citroen C4 Cactus compact CUV.

The jobs will be reduced through retirements, voluntary resignations and layoffs of workers who will receive 80% of their salaries through government unemployment benefits supplemented by the automaker.

The workforce reduction will remain in effect at least until 2021, when a new model is slated to go into production at the facility.

Built exclusively at the Madrid plant, Cactus sales have fallen short of projections. The factory built 87,300 units in 2015 and 81,000 last year. First-quarter 2017 results show European sales have declined 9% from prior-year and exports to non-European markets have been marginal.

PSA, which is purchasing the Opel and Vauxhall brands from General Motors, responded to slow Cactus sales by furloughing 65% of the plant’s 1,311 hourly employees for 14 days in 2016 and 35 days this year. But Cactus inventories have continued to build as sales have lagged, and the French automaker says the last of the 49 off-days will be exhausted this month. That has led to PSA’s decision to cancel one of two shifts at Madrid.

Workers approved the move after PSA pledged to award the Madrid plant in 2021 a new, “high-volume” vehicle built on the automaker’s latest Common Modular Platform and invest €144 million ($157 million) in preparations for the new model, probably a new-generation Citroen C4 C-segment car. Annual production capacity would rise to 100,000 units, the level needed to maintain a second shift at the plant.

The Madrid factory, one of two PSA assembly plants in Spain, has been problematic in recent years. It turned out 166,000 units in 2000, when its official capacity was 150,000, but built only 54,000 in 2013.

Despite PSA’s announced plans for the Madrid plant, workers reportedly are concerned that work could be lost to Opel’s much larger plant at Figueruelas after PSA completes its acquisition of Opel and Vauxhall from GM.