Nissan Blow Leads to Regret and Defiance in a Brexit Heartland
(Bloomberg) -- Lisa Roley has worked at Nissan Motor Co.’s car plant in Sunderland, U.K., for the past two decades. Like the majority of people in the city, she also voted to leave the European Union in 2016.
A day after the Japanese manufacturing giant pointed a finger at Brexit as it abandoned plans to build a new model at the factory in northeast England, the 47-year-old cleaner was questioning her decision. The warnings from some local politicians and executives of what might happen were no longer being dismissed as fantasy.
“I’m not so sure now,” said Roley, as she waited for the bus back to her home four miles away from the sprawling grey Nissan complex. “They’re saying on the telly it’s going to affect a lot of businesses.”
Sunderland’s enthusiasm for Brexit encapsulated the causes of Britain’s Trump-style rebellion, a culmination of budget cuts, resentment toward immigration and perceived neglect. Now the city finds itself at the sharp end of the consequences, at the mercy of the protracted and painful divorce from the EU with its economic lifeblood looking more precarious.
Nissan’s move to locate construction of the X-Trail sport utility vehicle in Japan was partly motivated by a decline in diesel sales, but Brexit has cast a long shadow over Sunderland’s largest employer. When Nissan set up shop in the mid-1980s, it was expressly to use the region and its North Sea ports as a gateway to Europe’s common market.
The car plant, now Britain’s largest, turned into a mainstay of the regional economy. It sustained the area’s industrial heritage after the collapse of coal mining and shipbuilding led to some of the country’s worst unemployment and poverty. Employing 7,000 people and supporting another 28,000 supplier jobs, the factory churned out 442,000 autos last year.
“Everybody who lives in Sunderland either works in the plant or knows somebody who does,” said Mick Johnson, 61, a taxi driver who regularly ferries visitors to the factory. He voted to remain in the EU. “It’s absolutely huge.’’
Nissan and other carmakers are concerned that Brexit will disrupt the flow of components and finished vehicles across the U.K. border. They’re particularly worried about the possibility of a no-deal split, which would introduce customs checks and tariffs under World Trade Organization rules, jeopardizing their just-in-time manufacturing processes.
Many automakers are stockpiling parts and scheduling maintenance stops after March 29 to minimize the impact of any upheaval. But it’s a 46 percent drop in industry investment in the U.K. last year, together with mounting job losses and delayed decisions on new products, that are the chief concern for workers.
Jaguar Land Rover, Britain’s biggest carmaker, said last month it would scrap 4,500 posts in response to a sales slowdown blamed on the diesel slump and Brexit. Ford Motor Co. is consolidating U.K. offices, while thousands of job cuts worldwide could threaten its Bridgend engine plant in Wales. And the future of PSA’s Vauxhall Ellesmere Port site is in doubt as it mulls plans for the next Astra.
“The longer the Brexit uncertainty goes on, the more the damage will be,” said David Bailey, professor of industrial strategy at Aston Business School. “Manufacturers have got some big decisions coming up about future models and whether to build them in the U.K.”
While Nissan has reassured staff about future investment in vehicles already produced in Sunderland, including the Qashqai and Leaf models, there’s concern that the X-Trail decision may prove to be the thin end of the wedge, said Steve Turner, head of manufacturing at Unite union.
“The reality is that if we fall out on March 29 without a trading relationship with the EU, they’ll review their decisions,” he said. “They’re incredibly worried about how the Brexit argument develops.”
Members of Parliament representing Sunderland voted against the government’s current Brexit deal and want to avoid what they see as a catastrophic hit to the region’s economy. A poll by the local newspaper, though, found that most people wanted to carry on with Brexit regardless of how it unfolds.
Some Nissan workers said they aren’t sure how serious a threat Brexit represents. They declined to be identified by their full names because of the sensitivities around the plant when talking about politics.
David, 19, who had just finished an eight-hour stint working on the Qashqai and Leaf, said there are conflicting views among colleagues. Some reckon many jobs will be lost; Some say that it’s just lies, he said.
Heading home after a shift, others stood by their Brexit vote. A maintenance engineer for Calsonic Kansei Corp., which makes parts for Nissan, said the X-Trail decision was a blow, but not as bad as it was being portrayed. His frustration was with the time it’s taking the government to implement Brexit more than 2 ½ years after the referendum.
Two other Nissan workers said some politicians were scaremongering over the impact of Brexit, and that there is nothing to fear from a no-deal departure from the bloc. “The plant’s still here,” one said. “I’ve still got a job and a roof over my head.”
Nissan’s decision not to build the X-Trail in Sunderland has hit home also because Prime Minister Theresa May’s government moved quickly to safeguard the company’s U.K. investments in the wake of the 2016 Brexit vote.
Business Secretary Greg Clark revealed on Monday that Nissan was awarded 61 million pounds ($80 million) in grants, contingent on building the Qashqai and X-Trail in Sunderland. That money is at risk if it reneges on the deal, he said.
Taxi driver Johnson said the 61 percent Leave vote in Sunderland, the first district to declare for Brexit in 2016, was motivated by concerns about immigration and jobs, but overlooked the economic benefits of EU membership.
“This was a proper industrial town,” he said, pointing to the derelict shipyards by the River Wear where he once worked. “Now there’s only Nissan left.”
©2019 Bloomberg L.P.