PSA to Close Ryton Plant in 2007

PARIS – The U.K. will lose another car assembly plant in 2007 when PSA Peugeot Citroen closes the doors of its plant in Ryton, near Coventry.

The factory, which has made the Peugeot 206 since it was introduced in 1998, will reduce production to a single shift in July and close permanently in the first half of 2007.

Although Peugeot is introducing the 207 now in Europe, the 206 will remain in production as a value option. It will continue to be built in Brazil, China, Argentina and Iran for years.

The 206CC will continue to be produced in Mulhouse, France, until it is replaced by the 207CC; and the PSA factory in Poissy, France, will continue 206 production for an undetermined time.

Ryton employs 2,300 workers, and PSA is in talks with the unions there on the disengagement. It is relatively easy to shed employees in the U.K.

Three years ago, when the 206 was at the height of its popularity, Ryton employed 3,025 on three shifts. Last year, the plant assembled 130,000 units.

PSA has said Ryton is the auto maker’s most-expensive production site.

Peugeot 206 to remain in production.

In a release, PSA says a detailed study conducted in first-quarter 2006 “confirmed the weaknesses for the Ryton plant – high production and logistical costs – which mean that the group is unable to justify the investment needed for the production of future vehicles (beyond the 206)."

The closure of Ryton, with its capacity of 180,000 units, will coincide with the opening of a PSA plant in Trnava, Slovakia, next year with a capacity of 300,000 units annually.

When the Slovakian plant was announced, PSA was pelted with questions about the future of Ryton, but as recently as last month the auto maker said a future product had been scheduled for the U.K. factory.

However, it is clear Ryton is a victim of changing forces in Europe. Wages in Slovakia, at about €325 ($400) a month, are much lower than in the U.K., and PSA will not be subject to exchange rate fluctuations between the British pound and the euro.

The new Slovakian factory also will be more efficient than the Ryton plant that began producing Rootes Group vehicles in the 1940s. The plant was acquired by Chrysler (Corp.) Europe in 1964 and was taken over by PSA in 1978.

In addition, while the Slovakian factory is at the eastern edge of Western Europe, it is nearer the center of Eastern and Central Europe, whereas Ryton is on the island off the western coast.