Peugeot to close plant and cut 2,300 jobs

French firm PSA Peugeot Citroen SA today announced it would cut 2,300 jobs in Britain as it phases out production of the 206 subcompact car at its Ryton plant near Coventry.

In a statement, Peugeot said it had decided not to upgrade the plant to produce newer models after production ends in mid-2007.

The company said its decision was based on a study that revealed “weaknesses” at the plant, leading to “high production and logistical costs, which mean that the group is unable to justify the investment needed for the production of future vehicles”.

Peugeot said the job cuts would occur in two phases, with the plant moving to a single shift in July and closing its doors about a year later.

The 206 is gradually being replaced across Europe by Peugeot’s 207 model.

The company pledged to “work closely with the unions through the coming months to provide a support package for staff and to help as many as possible find alternative employment”.

Tough price competition in Europe has already forced Peugeot to cut production at a number of European sites to prevent a build-up of inventories.