Weekly News Review | 23 October 2017 | Automotive Purchasing and Supply Chain Automotive Purchasing and Supply Chain

Talking Point

Vauxhall’s downturn is an inevitable result of globalisation - and Brexit

The news that PSA have decided to cut 400 jobs at the Vauxhall Astra plant at Ellesmere Port near Liverpool in the UK plant has not really surprised most industry observers but the reasons given by the French owners do seem slightly at odds with what those observers expected. A PSA spokesman told us that a downturn in demand for the Astra, and not Brexit or the relatively high cost of making cars in the UK, was responsible. Carlos Tavares told me, in an interview this year, that PSA was committed to the plant and that he would authorise investment in the facility to increase its productivity, by adding much-needed modernisation to its lines.

While the plant is on course to produce 110,000 cars in 2017, 30,000 short of its 2016 figure, the Asta has been a real success story for Vauxhall, Opel, and for Ellesmere Port. Its workforce is tremendously proud of the car, and proud that it won the contract to build it against stiff competition from Opel’s flagship plant, Rüsselsheim in Germany. The Astra is also built at the Gliwice, Poland plant, at a much lower labour cost.

Sales of saloons and hatchbacks have been down in 2017, as SUV and crossover sales have risen. It is a slightly sad coincidence that Vauxhall/Opel has recently introduced new SUV models, which were long overdue, and these are taking sales away from the Astra and others in its segment.

One really cannot blame Carlos Tavares and his team for considering running Ellesmere Port down; the plant, along with its sister van plant in Luton near London, has suffered badly from receiving very little investment from General Motors for decades. PSA had considerable over-capacity elsewhere in Europe before Tavares closed several plants in France and the French and German unions will be putting a lot of pressure on him to favour employment for their members against UK workers.

The Luton van plant, the UK’s largest commercial vehicle making facility since Ford pulled its Transit production out of the country, is likely the first facility to be cut. It has been so short of investment from General Motors that engineers there were forced to buy production equipment on eBay, and collect obsolete robots from other UK carmakers’ scrappage areas to use in the plant. Employment there fell by two-thirds during the global economic downturn and it is especially vulnerable as it cannot produce the high roof versions of the Vivaro or Renault Trafic and has to compete with highly efficient production at Sandouville in France, which builds Laguna and Espace as well as the Trafic and high-roof Vivaro. Nissan’s Barcelona plant makes the similarly-platformed NV 200, and its all-electric version.

This opportunity to work with Renault-Nissan to make an Opel/Vauxhall electric light van will not be lost on Tavares and may be the catalyst that spells the end for the Luton plant. And where Luton leads, Ellesmere Port may follow.

Simon

Simon Duval Smith

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