Issue of the week: Nissan’s “secret plan”
The Japanese carmaker is reportedly betting big on post-Brexit Britain. Will other companies follow suit?
Last October, the chairman of Nissan Europe, Gianluca de Ficchy, warned that a hard Brexit “would put Nissan’s entire European business model in jeopardy”, if it meant the imposition of a 10% tariff on UK exports under WTO terms, said Julia Kollewe and Rob Davies in The Guardian. But it may not be British workers who’ll suffer. In a proposal leaked this week, the Japanese carmaker outlined that, far from shuttering its Sunderland plant – Britain’s largest car factory, which employs 6,000 people – it could seek to ramp up production in the UK and pull out of mainland Europe completely, shutting its “struggling van factory in Barcelona” and ceasing manufacturing in France. What a turn up for the books.
Nissan’s putative plan is certainly “audacious”, said Peter Campbell and Kana Inagaki in the FT. The reasoning goes that if carmakers importing to Britain, such as Ford and VW, face tariffs that make their cars more expensive, “Nissan’s UK-made models would have a competitive edge”. So much so that Nissan reckons it could take its market share in Britain from its 4% currently “to as high as 20%”. It’s easy to see why the Japanese are so keen on a UK pivot: the company has invested some £4bn in the Sunderland plant, “which is Nissan’s most efficient outside Japan”, and is “determined to keep it operational”. “As Brexit dividends go”, this one is “turbocharged”, said Robert Lea in The Times. Yet there are “some staggeringly heroic assumptions here” – not least the need to “source all its componentry from a UK supply chain, that doesn’t exist and would take years to build”, if it is to avoid import tariffs itself. As for the notion of winning 20% of the home market: well, even Ford – Britain’s 50-year market leader – never achieved that. Perhaps we should take Nissan at its word when it says there are no concrete plans for this move. “Still, if those unleashing Britain’s potential can’t be optimistic in the first week of Brexit, when can they be?”
If I had a pound for every time the luminaries of the People’s Vote campaign used Britain’s car industry as an illustration of the devastation Brexit would wreak on the economy, “I’d have enough money to buy a mid-market SUV”, said Matthew Lynn in The Daily Telegraph. But Nissan’s “secret plan”, assuming it exists, makes sense. And it also raises the interesting question of who might follow suit. Companies have spent a lot of time arguing for the UK to stay in the EU. But once circumstances change, they’ll switch strategies very quickly to adjust to a new set of realities. “A hard Brexit could indeed lead to a revival of manufacturing in Britain, possibly on a spectacular scale. Perhaps the workers of Sunderland weren’t so stupid to vote for it after all.”