Nissan has announced that its Sunderland plant could face decline unless the UK adopts the euro. The Japanese manufacturer, which was given £40 million in government grants two years ago, could switch production to Renault’s plants in France. As long as the UK remains outside the eurozone, its automotive industry faces a major challenge to remain competitive.
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Nissan’s president and chief executive Carlos Ghosn has expressed dissatisfaction with the lack of progress being made over the UK’s eurozone entry. Speaking as the company unveiled some of its redesigned lineup at the US Detroit Motor Show, including revamped Quest minivan and Maxima sport sedan models, Ghosn declared that its Sunderland plant could lose out if the UK remains outside the single currency. According to reports the carmaker is looking specifically at building the next Almera in France instead.
Nissan’s warning could force the government to pledge further financial help to assist production and protect British jobs. In 2001 the European Commission approved a £40 million UK government grant to the Japanese manufacturer to secure the contract to build the redesigned Micra in Northeast England.
To make matters worse, the Sunderland plant is also a step closer to its first strike as workers have voted in favour of industrial action following Nissan’s decision to relocate its purchasing department a few hundred miles south to Bedfordshire.
Although UK automotive production continues to rise, the outlook for the sector is unclear. The adoption of short-term measures such as flexible working practices should help maintain competitiveness but plant consolidation could prove to be a necessary long-term solution. The ability to switch production and allow effective use of multiple-model lines is a crucial advantage in the current market conditions.
By opting out of the single currency, the UK loses some of its attractiveness as a location for the production of models sold principally in Europe. Although manufacturers such as Jaguar, Land Rover and BMW are expecting to continue their investment, the drive for profitability and cost efficiency may force other manufacturers to look more closely at the eurozone or other low cost countries.
