Management
at the Valeo auto climate control components plant at Gorseinon, near Swansea
in Wales, yesterday told 330 workers that the factory is closing at the end of
July as a result of European cost cutting and realignment. The plant makes heater
and air conditioner units.

But the Cardiff-based Western Mail reported that a row is likely to break out
after Valeo admitted it expects to shift the production lines to the Czech Republic
where labour costs are much lower than in Wales. A similar situation surrounded
the closure of the Lucas wiring harnesses factory in the Swansea Valley

Managing director Harvey Preston said: "This extremely difficult decision
is the result of the transformation under way in the automotive industry.

"A plan for factory closure has only been put forward to the workforce
following a thorough assessment of our manufacturing facility here in Gorseinon.

"It is clear that with significant reductions in our planned workloads,
it will not be economically viable for us to continue production in the future."

The Western Mail said that the nail in Valeo’s coffin was the announced intention
by GM to move production of the next Vectra from Luton to Antwerp, although
Vauxhall management in Britain is now trying to get the lines relocated to Ellesmere
Port.

The Gorseinon plant has lost about 20 percent of its orders since 1998 and
it expects a further 30 percent to be sliced away over the next three years,
mostly as a result of the Vectra relocation.

In addition it has received fewer orders from MG Rover, BMW and Land Rover,
who are all seeking to simplify their supply chain and cut costs through pressure
on suppliers.

Ironically, worldwide demand for air conditioning and climate control systems
is steadily rising but it is not a particularly highly skilled sector and assembly
can be done in parts of the world with a much lower cost base, such as China
or Eastern European and former Russian states.

Valeo’s Gorseinon plant is among the most modern in Europe and is only eight
years old. It has been the company’s most efficient plant in Europe, but that
was not sufficient to save it yesterday.

The talks which will go on over the next few months will include a run-down
package for workers and the company will consider any other options to continue
production at Gorseinon, including any available financial assistance from the
Welsh National Assembly.

A spokesman for Valeo confirmed to the Western Mail that if the plant is closed
its machinery will be transferred to another site, probably in the Czech Republic.

Valeo’s announcement was devastating news and came out of the blue, said the
chief executive of the Welsh Automotive Forum, Tim Williams.

"It’s a shame when companies have to do this because no one likes to see
massive job losses coming through."

He added, "The Forum has a task force which will help those coming out
of the business to retrain and assist them to get back into work as soon as
possible and we will be working with the unions, agencies and government departments
to achieve this goal."