Vauxhall Owner PSA Warns on Future of Ellesmere Plant in England

(Bloomberg) -- The French owner of British automaker Vauxhall used the shaky start of trade negotiations between the European Union and the U.K. to warn about the future viability of its Ellesmere Port plant in England.

“We will make a final decision once we understand the outcome of the discussions,” Carlos Tavares, head of PSA Group, said on a conference call Tuesday, adding that investment in the factory will remain frozen until further notice.

British and EU officials started hashing out a future trade accord this week in a climate of suspicion, with the two sides already at loggerheads on some key issues. In calling for a deal that would allow the tariff-free movement of parts and cars, Tavares echoed a similar warning from Nissan Motor Co. last month on its U.K. factory at Sunderland.

Read more: Nissan Warns About Future of European Plants as Brexit Weighs

“We would have to evaluate if there is a business case” for Ellesmere Port, and “if we can make some money out of it,” Tavares said on the media call, planned after the Geneva car show was canceled because of coronavirus concerns.

Should the financial numbers fail to add up after a trade agreement is reached, the manufacturer could ask the British government to compensate it for any trade barriers that may arise, he said. If the deal doesn't create a business model that flies, Tavares said “significant social issues for the country” may result.

“We are crossing our fingers that good sense will prevail,” he said.

Carmakers, planemaker Airbus SE and other manufacturers warned in the runup to Brexit that they would be forced to reevaluate their operations if the split leads to border delays, tariffs, or paperwork that drive up costs.

PSA employs about 3,000 people in the U.K., mainly at plants in Ellesmere Port, where it builds the Astra model south of Liverpool, and Luton, near London, which turns out mid-sized vans.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Frank Connelly, John Bowker

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