Unions slam Peugeot's decision to close UK plant

LONDON, Apr 19 (Reuters) Unions have condemned plans by French carmaker PSA Peugeot Citroen to close its plant in central England with the loss of 2,300 jobs and vowed on Wednesday to fight to have the decision reversed.

The world's sixth-largest carmaker, which has been battling with sluggish sales at its main markets in western Europe, said on Tuesday it could no longer afford to carry on investing in the Ryton plant near Coventry due to high costs.

The decision to close the plant in the West Midlands, Britain's traditional manufacturing heartland, follows last year's collapse of MG Rover which cost 5,000 jobs.

The company said it would consult trade unions and provide a support package for staff with the aim of helping as many workers as possible find alternative employment.

But union leaders, who are to hold a series of meetings on Wednesday, said they wanted the closure plans reversed, and called the company's actions ''callous'' and ''absent of any social responsibility''.

''Make no mistake, we will be looking, as a matter of the utmost urgency, to explore with the company as well as with ministers ways to have this devastating decision reversed,'' said Tony Woodley, general secretary of the Transport and General Workers Union.

He also attacked the government for what he described as a policy of ''leave it all to the market madness'' which had ''massacred'' British manufacturing.

''We warned this government three years ago that the labour laws in this country which allowed people to be sacked and plants to be closed cheaply, quickly and easily needed to be tightened up,'' Woodley said.

EXTREMELY DISAPPOINTED The government, which had offered Peugeot a 14 million pound ( million) grant in 2004 to redevelop the plant, said it was ''extremely disappointed'' by the news.

''We will do everything we can to support those affected, be it at Ryton or in the supply chain, and to help them find new employment or, where required, to retrain,'' Trade and Industry Secretary Alan Johnson said.

''We will be looking to Peugeot to assist us in this, including the exploration of options for the future use of the Ryton site.'' Britain's car manufacturing industry has had to contend with fierce competition from overseas carmakers and cheaper manufacturing costs in emerging markets.

U.S. automaker Ford, which owns the luxury brand Jaguar, cut jobs and scaled back production in England in 2004.

PSA, which has been expanding output in low-cost eastern Europe, said it would close the Ryton plant in two phases. The factory's two working shifts would move to a single shift in July 2006, with production halting by mid-2007.

PSA Chief Executive Jean-Martin Folz told BBC television that Ryton had to close because its distance from suppliers on the European mainland meant its costs were higher than those of any other plant in the PSA group.

Modernising the factory to enable it to build a new model would have cost 250 million euros (7 million), he said.

''But even after these investments, Ryton would have stayed the most expensive plant in our organisation,'' he said.

''This is the only decision we could make. We have been looking at it from every angle, and there was no way to maintain an economic production in Ryton,'' he added.

Built in 1939, the Ryton plant assembles the Peugeot 206 model. Output totalled 130,000 vehicles in 2005, according to PSA's Web site.

REUTERS CS SND1316