Nissan Could 'Pull Out Of EU And Expand In UK' After Hard Brexit

Nissan Could ‘Pull Out Of EU And Expand In UK’ After Hard Brexit

Nissan Could 'Pull Out Of EU And Expand In UK' After Hard Brexit

According to reports, Nissan has drawn up plans to cease manufacturing in the EU in favour of investing in its UK operations…

Drawing Up Contingency Plans

It’s not a good time to be a car manufacturer in the UK. Tough market conditions and Brexit uncertainties have eaten away at investment and wreaked havoc on the operations of industry giants. Ford is closing its Bridgend plant and Honda its facility in Swindon. There are also fears for Vauxhall’s plant in Ellesmere and Jaguar Land Rover has announced ongoing job cuts. Nissan, however, is looking to buck the trend; at least according to alleged contingency plans drawn up by corporate chiefs.

If a trade deal is struck up between the UK and the EU that places tariffs on car imports, it’ll reorient its entire European strategy. According to the Financial Times, that first reported on the alleged plans, Nissan would cease manufacturing in Spain and France. Instead, it’d look to produce cars in the UK and for the domestic market; reportedly hoping to increase its market share from 4% to 20%. This would involve making use of its vast plant in Sunderland; thereby sidestepping it competitors who’d be forced to import their cars and, therefore, face financially challenging tariffs.

Plausible Deniability

Since the Financial Time’s story leaked, Nissan has denied that such contingency plans exist. A spokesman for the company said, “we deny such a contingency plan exists. We’ve modelled every possible ramification of Brexit; and the fact remains that our entire business both in the UK and in Europe is not sustainable in the event of WTO tariffs”. They added, “we want our UK team of more than 7,000 people to have the best possible chance of future success. Which is why we continue to urge UK and EU negotiators to work collaboratively towards an orderly balanced Brexit that will continue to encourage mutually beneficial trade”.

Historically, the Japanese automaker has been frank about the nation’s departure from the EU. Gianluca de Ficchy, the chairman of Nissan Europe, has even stated that a 10% tariff would threaten its entire European operation and business structure. David Bailey, the professor of industrial strategy at Aston Business School, accepted that the plan could exist but was sceptical of its feasibility. He said, “Nissan has certainly been doing scenario modelling and it’s not clear how current this planning is”. He continued, “it’s one possible response to the hard Brexit scenario but I don’t think it’s a feasible plan.”

So, What’s Going On?

Nissan’s swift denial that it had a UK-focused contingency plan is telling. But not because it necessarily means it doesn’t exist. It’ll naturally want to avoid offending European governments, trade unions and employees. It also almost certainly regards a free-trade agreement between the UK and the EU as being the most desirable outcome. Nevertheless, the contingency plans as reported by the Financial Times are at least internally coherent. Sunderland is the UK’s largest car plant and Nissan’s largest in Europe. It possesses mature supply chains, a well-trained staff and modern infrastructure. Tariffs would also harm some its biggest competitors, the majority of which don’t manufacture cars in the UK.

Whilst Nissan’s alleged plans have caused political commotion, the story says more about Nissan than it does the UK. Brexiteers regard the plans as proof that the country’s independence from Brussels marks it out as an enticing place to invest. For Remainers, the woes of Nissan (and other automakers) are chiefly Brexit-related. The reality is, the plans simply demonstrate a fail safe; a means of making the most of a bad situation. Nissan wouldn’t be investing in the UK because of Brexit; but would rather be forced to due to the possibly of the tariffs it entails.

Either way, the plans to suggest that Nissan still values Sunderland. That, at the very least, is something we can all celebrate; Brexiteer, Remainer or otherwise.

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