PSA Ponders Plan to Shutter a U.K. Plant

PSA Group’s Opel unit reportedly is studying the possible closure of a Vauxhall assembly plant in the U.K. if sales sour after Britain leaves the European Union on March 29, Bloomberg News says.

Like other carmakers operating in the U.K., PSA worries that a “hard” Brexit would snarl production and could result in permanently higher prices that make manufacturing in England uneconomical.

PSA employs about 3,000 people at plants in Ellesmere Port ,which makes a Vauxhall variant of the Opel Astra small sedan, and Luton, which builds medium-size vans. In January PSA cut jobs for the second time at the Ellesmere facility. In April it announced a new van program for the Luton factory.

Sources tell Bloomberg that one short-term Brexit option would be to stockpile parts before next spring. Doing so would enable both facilities to ride out widely expected import-export problems if Brexit arrives with no clear trade plan with the EU.

The tentative Brexit deal unveiled yesterday by Prime Minister Theresa May garnered little political support, making a disruptive exit more likely. May points out that the U.K. is legally bound to make an exit from the EU in March, deal or no deal.

The U.K. exports about 80% of the vehicles it produces, mostly to Europe. The U.K. generates about 10% of PSA’s global unit sales, Bloomberg notes.