In a stark warning to the Government, Nissan has said that it must invest £100 million to attract key component suppliers to the the UK or risk seeing the Japanese car maker’s Sunderland factory suffer.
According to the Financial Times, the UK’s car factories are heavily reliant on goods from overseas to build their cars, with over 60 percent of parts said to come outside the UK. This, says the newspaper, leaves car firms vulnerable to currency fluctuations and, in light of the UK’s 2016 Brexit vote, the potential for trade tariffs when it eventually leaves the EU.
When speaking to MPs on the International Trade Committee, Nissan’s head of European manufacturing, Colin Lawther, said: “This is critical. If we don’t really invest in the supply base it will be a house of cards effect. Nissan will not succeed in the future, with or without Brexit, unless the government does something to help us in the supply chain.”
Worryingly, when asked if Nissan’s flagship Sunderland plant was safe, Lawther was pessimistic, saying: “No, I wouldn’t say that.” He added that around £40 million of the suggested £100 million should be spent in the north-east region to assist Nissan in attracting new suppliers.
Lawther’s remarks form part of a wider move by a group of British manufacturers from the car, aerospace and railway industries, lobbying the government to boost its £120 million contribution towards growing the UK’s supplier base. Nissan itself has already made plans to invest £2 billion with UK suppliers, which will see it almost doubling the £2.5 billion it already spends on UK-sourced parts.
Encouraging more suppliers to make the UK their home was a key part of the reassurance deal struck by the government with Nissan in November last year following the Brexit vote. Lawther remarked that the deal “gave assurances that we would have competitive trading environment at the end of the process."
He also noted that the spectre of trade tariffs would be a “disaster” for the company, and it may cost it around £600 million. He did, however, say that Nissan would stand by its decision to continue to make cars in the UK, although if anything changed it would review its position.
Source: Financial Times