Unions representing workers at Peugeot’s Ryton assembly plant are calling for a meeting with the carmaker following its announcement this week that it will cut up to 850 jobs.

Peugeot blames the decision to end the factory’s third shift on falling sales volumes of its 206 hatchback, currently Europe’s biggest-selling small car, in the face of growing competition in the sector. It cut the fourth shift at Ryton in March 2004 with 700 job losses.

The latest news darkens the shadow already hanging over the plant’s long-term prospects. Only last month Peugeot announced the successor to the 206, the 207, will be built at plants in France and Slovakia, although it says production of the 206 will continue “for several years to come”. Peugeot had applied for European Union state aid to underwrite a £200m modernisation programme at Ryton. Brussels provided £14m last year.

Dave Osborne, Transport and General Workers Union national secretary for the car industry, describes the news as “extremely disappointing.” He says: “The T&G will oppose any attempts to make compulsory redundancies. We’ll be seeking an urgent meeting with senior Peugeot managers in the light of the renewed concerns for future models at Ryton the manufacturer’s announcement will surely bring.”

Peugeot says the plant will return to the two-shift operation it utilised from 1988 to 1999 and which, it says, was originally planned for the lifetime of the 206 when it was launched in 1998. “This return to a two-shirt system has also recently taken place at other European plants within the PSA Peugeot Citroen Group,” says a spokesman.

“Ryton will continue to be one of the three production sites for the Peugeot 206 in Europe and will play a key role in the comp-any’s manufacturing strategy as it will become the main European production site for the car for several years to come.”

Peugeot hopes many of the 850 cuts will be through voluntary redundancy and early retirement programmes. Outgoing PSA chairman Tod Evans insisted in December Ryton had a future.