Nissan may review plan to make SUV in Britain

Japanese carmaker Nissan will review its decision to build the Qashqai SUV in northern England if Britain leaves the European Union (EU) without a deal, potentially leading to the closure of the Sunderland plant, the Financial Times reported.

The vast site holds a symbolic position in the UK after former Prime Minister Margaret Thatcher lured Nissan there in 1986, beginning a recovery in British car-making after its near collapse in the 1970s.

Britain’s big carmakers, all foreign owned, had urged Britons to vote to stay in the European Union in the 2016 referendum and have warned ever since that they will struggle to operate if the normal European trade arteries are disrupted.

All carmakers rely on supply chains that run across Europe, bringing components to factories on a just-in-time basis.

In the months after the 2016 vote the then prime minister, Theresa May, struck a deal with Nissan to keep it in Britain, promising extra support in written assurances that Brexit would not hit the Sunderland plant’s competitiveness.

Former Chief Executive Carlos Ghosn, who was involved in those negotiations, has since been fired by Nissan. The FT quoted three people with knowledge of the matter as saying that the decision to build the Qashqai in Britain had been contingent on a so-called “soft” Brexit that included a smooth transition.

“While we don’t comment on speculative scenarios, our plans for Qashqai production in Sunderland have not changed,” a company spokesman said.

Nissan has already cancelled plans to make the next model of its X-Trail SUV in Sunderland, saying in February that uncertainty over Brexit was making it harder to plan for the future. It decided to produce the vehicle solely in Japan.

Britain has already delayed two deadlines to leave the bloc and Prime Minister Boris Johnson has vowed to deliver Brexit at by the end of October, with or without a deal, alarming companies that rely on trade routes to operate.

Japanese companies including automakers Honda and Toyota have long seen Britain as the gateway to Europe.

The Nissan spokesman said that frictionless trade had enabled the Sunderland plant to become the biggest factory in the history of the British car industry, exporting more than half of its production to the EU.

“Today we are among those companies with major investments in the UK who are still waiting for clarity on what the future trading relationship between the UK and EU will look like,” he said.

Prime Minister Boris Johnson needs to make his priority getting a Brexit deal to protect the economy, rather than wooing voters with a political promises, business groups attending the Conservative Party conference said.

Less than a month until Britain is due to leave the European Union, Johnson’s Conservative Party conference in Manchester is festooned with a three word slogan that encapsulates his approach to leaving the European Union: “Get Brexit Done”.

He wants a deal with the European Union to smooth Britain’s exit from the bloc next month, but if he can’t get one in time he wants to leave on Oct.31 anyway - a prospect that has the many in the business community on edge.

“The message from business to government is clear: get a Brexit deal done,” said Claire Walker, Co-Executive Director of the British Chambers of Commerce.

The traditionally centre-right Conservative Party has long used its annual gathering of members, sponsors and donors to promote itself as the party of business, a pledge to set it apart from the leftist opposition Labour Party.

But this year in Manchester, with a party and electorate deeply split over Brexit, and an early election on the horizon, that focus has shifted onto a promise to get out of the EU, prioritising an end to over three years of political crisis.

That is at odds with what businesses represented by major lobbying groups want. They say the possibility of leaving the EU without a deal is casting a long shadow over the economy, deterring investment and driving activity overseas.

“Businesses are adamant that a Brexit deal remains their top priority. The economic fall-out from a no deal scenario would be severe,” said Matthew Fell, Chief UK policy director at the Confederation of British Industry.

Pessimism in British businesses rose in the three months to September to the highest level in almost eight years, a survey on Sunday showed. Britain has been this close to Brexit before.

Ahead of an earlier exit deadline in March, subsequently missed because parliament refused to sanction a deal negotiated by Johnson’s predecessor, firms racked up costs stockpiling components in case of disruption to supply line.

This time round, the same thing is happening, according to recent surveys.

Even though Johnson has placed more emphasis on planning and preparation for a no deal, spending millions on information campaigns aimed at businesses large and small, firms say they don’t have the details they need.

“We’re already seeing the economic impact of the relentless uncertainty in the form of sluggish growth and anaemic business investment - unsurprising given firms have no clarity on what conditions they’ll face in a mere matter of weeks,” Walker said.

“The focus of Westminster should be on the practicalities not the politics.”

Still, there is a cost.

Reuters