Peugeot says competition to sell small cars is tough

The Transport & General Workers Union (TGWU), and Amicus said they will meet with Peugeot's UK management.

Peugeot said rising competition in the small car sector and a dip in sales of its 206 model had led to the job cuts.

Trade unions have vowed to oppose compulsory redundancies at Ryton, which employs about 2,800 workers.

Peugeot's decision is the latest blow to Coventry's car industry; Jaguar shut production at Brown's Lane last year.

Competitive pressures

Peugeot said it would reduce work at the plant from three shifts a day to two in the summer.

We will oppose any attempt to make compulsory redundancies Dave Osborne, TGWU

The company said it hoped to cut jobs through voluntary redundancies, early retirement and redeployment of staff at other Peugeot sites.

"Despite the Peugeot 206 continuing to be one of the best-selling retail cars in Europe, the small car segment has seen a considerable broadening of the product offering," the company said.

"This has impacted on the sales volumes of the Peugeot 206."

Talks call

A spokeswoman for the TGWU said that "while the job losses are bad enough, the concerning issue is Peugeot's failure to highlight a new model for the 206.

"We are, therefore, looking to talk as a matter of urgency to the chairman of the company and Trade Secretary Patricia Hewitt to resolve this and secure a long-term future for the plant."

Dave Osborne, national officer of the TGWU, called the planned redundancies a "double blow following a cutback last year from four to three shifts".

"We will oppose any attempt to make compulsory redundancies."

Ryton future?

Peugeot pledged that Ryton would play "a key role in the company's manufacturing strategy as it will become the main European production site for the car for several years to come".

However, the Ryton plant's reliance on the ageing Peugeot 206 model may pose a risk for its future, according to Professor Garel Rhys, a specialist on the UK automotive industry at Cardiff Business School.

Ryton has been building the 206 since 1998

"Ryton does need another product," he told BBC Radio, pointing to a decline in the small car market as smaller models of people carriers have become more popular.

News of the job cuts is the latest blow to Coventry's car industry.

Jaguar, which is owned by Ford, decided to move work from Brown's Lane in Coventry to the Castle Bromwich plant in Birmingham, leading to 400 voluntary redundancies.