Fears mount over UK car jobs

FEARS are mounting of a jobs meltdown in the UK car industry after Peugeot announced it is to cut 850 jobs at its Ryton plant near Coventry. The move comes just weeks after industry insiders suggested that as many as 2,000 jobs could go at MG Rover's Birmingham factory, about one third of the total workforce, if the company is taken over by China's Shanghai Automotive Industry Corporation.

Peugeot said it had taken a steps to reduce production to reflect the tougher market but that these measures had not been enough and e job cuts were inevitable. More than 2,800 people work at Ryton plant which had been hailed as a UK car industry success story ? it produces the best-selling 206 range, which launched to widespread acclaim in 1998.

The next few months will see the plant reduce output substantially as it cuts the number of shifts from three to two. Peugeot said it hoped that a voluntary redundancy programme and a scheme to encourage some workers to take early retirement would avoid the need for forced redundancies.

Unions, meanwhile, described the news as 'another blow' for Coventry and said they would oppose any compulsory redundancies. Union leaders said they are concerned that a new model to replace the 206 did not appear to be in the pipeline. Coventry suffered bad news late last year when Ford, parent company of Jaguar, said that it would stop producing Jaguars at its Browns Lane site. That move led to 1,100 job losses.

Peugeot's problem has been the competition in the small car market in Europe, which has become one of the toughest in which to operate. The Peugeot 206 is the company's best-selling model and the fact that the company is not able to make enough money on it will send alarm bells ringing throughout the car industry.

Peugeot's decision to scale back production at Ryton will underline the extent to which Britain has slipped down the manufacturing league table and, in the run-up to a General Election, could have an impact on the re-election prospects of several local Labour MPs, some of whom have marginal constituencies.