The future of Vauxhall’s Ellesmere Port factory is threatened by high manufacturing costs and Brexit, according to owner PSA Group CEO Carlos Tavares.
Tavares said Ellesmere Port’s manufacturing costs are double that of PSA’s Sochaux factory in France. “This is striking because the best, most cost-competitive place to make cars in Europe is not France because of the labour cost.
“When you reach this kind of situation, it creates a risk for the future,” he told CM.
“It means we immediately need to set up a plan to improve the manufacturing cost competitiveness on the plant, based on many factors, such as internal logistics, energy, and making the plant as compact as possible.”
Tavares said the situation at Ellesmere will be worse if the UK embarks on a hard Brexit.
“If it is a soft Brexit, we can still export cars from the UK to the continent, in which case your competitors are all the continental plants. We need to catch up with those plants, so the UK needs to improve its quality and cost competitiveness to be able to continue to export in a profitable way. But that’s soft Brexit – the one that’s not going to happen.
“If it’s a hard Brexit, it’s even worse. On top of having to be competitive against continental plants, you will have to overcome the penalty of a customs tax, which puts even more pressure on competitiveness, and makes it even more demanding.”
Whatever the outcome of Brexit, said Tavares, the issues at Ellesmere Port need to be fixed by the time the UK leaves the EU.
“The conclusion is: let’s get back to work, let’s work hard. Because we have two years to fix it, but not more. When Brexit happens, whatever Brexit it is, this situation needs to be fixed.”
PSA Group acquired Vauxhall and European counterpart Opel on 1 August. In October, Ellesmere Port announced it would be cutting 400 of the 1,800 jobs from the facility by the end of 2017.
The port produces the Astra car model in both hatchback and Sport Tourer body styles. PSA also owns a Vauxhall plant in Luton, which makes the Vivaro van.