Nissan is boosting UK production despite Brexit

Brexit concerns dispelled as Nissan boosts Sunderland production

Image credit: Reuters

Nissan has announced it will build its new Quashqai and X-Trail models in its Sunderland plant in the UK, signalling the company’s commitment to the country despite the impending Brexit.

The decision was made following a meeting between UK Prime Minister Theresa May and Nissan CEO Carlos Ghosn earlier this month and after a visit to Japan by business minister Greg Clark last week.

According to Reuters, Nissan received ‘a package of pledges from May’ regarding support to balance out any damage resulting from leaving the EU.

The automotive industry, as well as other sectors, has been concerned about the government pushing for the so-called hard Brexit, which means the UK could withdraw from the European Single Market in order to stop immigration from Europe.

However, both the government and Nissan representatives rejected speculation about specific compensations being offered to the company.

“The support and assurances of the UK government enabled us to decide that the next generation Qashqai and X-Trail will be produced at Sunderland,” Ghosn said.

Colin Lawther, Nissan’s senior vice-president for manufacturing in Europe told the BBC there was no written agreement between the car maker and the UK government.

“There is no offer of exchange. It’s just the commitment from the government to work with the whole of the automotive industry to make sure that the whole automotive industry in the UK remains competitive,” he said.

“We would expect nothing for us that the rest of the industry wouldn’t be able to have access to.”

The chief executive of Britain’s biggest car maker, Jaguar Land Rover, which is owned by India’s Tata Motors, told Reuters last month that it would want a level playing field were Nissan to get a compensation deal.

All major UK-based car makers are owned by foreign entities and export more than half of their production to the EU. Ahead of the June referendum, the firms warned quitting the bloc would make the UK less attractive for future investment.

“The vast majority of cars manufactured here in the UK are destined for abroad and future growth will depend on securing our international competitiveness and the barrier-free access to major global markets that has enabled the UK automotive industry to thrive,” said Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT).

The opposition has criticised May for a lack of strategic thinking to help support industry’s confidence ahead of Brexit.

“Are they now going to literally decide factory by factory what support they’re going to give?” shadow chancellor John McDonnell told an audience in London on Thursday. “We need a comprehensive strategy on access to the single market.”

Nissan has invested £4bn into its UK manufacturing since 1986. The Qashqai has been built in Sunderland for a decade. The plant currently employs 7,000 people and makes 2,000 cars a day. The decision to build the new X-Trail in Sunderland could create hundreds of jobs in the next few years, a Nissan spokesman said. The firm originally planned to make the decision in early 2017.

There has been speculation that the firm may move some production to France, where its sister company Renault is based, to avoid future possible EU export tariffs.

“Clearly there is this massive basket of unknowns from triggering Article 50 to the end of the process, and it is a massive amount of potential outcomes, so it is not really productive for us to speculate on what could happen,” said Lawther.

“Clearly, the question of Brexit put a large headwind in our way and it raised a basket of uncertainties. And we had to work very closely with the government to understand the government’s position.”

Reuters said the government promised to provide additional relief to Nissan in case of negative impacts on its business resulting from Brexit.

“The automotive sector is a good example where there are strong common interests between our continental partners and friends and the UK. There is a lot of cross-border trade,” Business Secretary Greg Clark told BBC News.

“The conversations we have had with Nissan and other companies in other sectors have all been about reinforcing the determination of this government to make sure that Britain not only stays competitive but is even more attractive for investment.”

But Liberal Democrat leader Tim Farron, while welcoming the announcement, described the government’s action as utterly ridiculous.

“If the government was serious about protecting jobs in the UK, it would be fighting to remain part of the single market,” he said.

Labour leader Jeremy Corbyn said that details of the deal between Nissan and the government should be made public.

“It must be made public, because it is public money that will be used if there are any inducements that have been offered and quite obviously, if you are offering big inducements to one industry or one manufacturer, then all the others will quite reasonably say, ‘Well, what about us?,’” he said.

The Sunderland area, like other parts of England’s industrial north, voted heavily in favour of Brexit on 23 June, despite car manufacturers and their unions campaigning to stay in.

Today’s announcement is the first major UK automotive decision since the Brexit vote. Keeping Nissan in the UK was regarded as vital for a successful Brexit.

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