Vauxhall may lose one of its two UK manufacturing plants if the market declines after the UK leaves the European Union, according to a report.
An unnamed source close to the brand told Bloomberg that the PSA Group, which took ownership of Opel and Vauxhall in 2017, is considering the best response to a potential drop in new car sales post-Brexit. One of the options under review is to close a factory here.
Further options include stockpiling parts to avoid shortages if customs issues arise and bringing forward a summer shutdown, much like BMW has done with Mini's Oxford plant.
If a plant closure is the favoured option, it's likely the axe will be brought down on Ellesmere Port. PSA has already highlighted deficiencies at the Cheshire facility, while Vauxhall's Luton factory had its fate secured for ten years back in April due to demand for capacity to build the Vivaro van.
Previously, PSA Group CEO Carlos Tavares stated that the Ellesmere Port plant must close the cost and quality gap between it and its European equivalents if it's to survive.
Speaking at the 2018 Geneva motor show, Tavares highlighted that the PSA Group's plants, including those that came as part of the Opel and Vauxhall acquisition, will all have an “equal and open” chance to demonstrate their competitiveness, but that there remains an issue of over-capacity that he needs to address.
Last year, 400 jobs were cut at Ellesmere Port, with company bosses saying the decision was taken due to 'market changes' rather than output or performance issues.
“Unfortunately, there was complacency for several decades, and now the gap between the UK and the Continental plants is significant,” he said. “But we see an opportunity in Brexit. While everything pauses to see what will happen with that, we will keep working. It gives us breathing space to improve competitiveness.”
Although Tavares hasn’t put a timeline on negotiations, he did highlight that other plants - and especially the workers’ unions at them - had already secured their futures by showing a flexibility to his needs to cut costs. “We need to reduce the total manufacturing costs significantly,” he said. “If you look at the plant in Zaragoza [in Spain], the unions demonstrated a high level of maturity in our negotiations and we agreed a deal to make the Corsa and electric Corsa there.
“Yes, the negotiations were difficult, but that is what it takes. When a company is complacent for decades it allows a gap to open. I'm not saying this to be difficult - it's the reality.”
