Nissan and Sunderland: Another blow for Project Fear
In the run up to, and indeed beyond, the 2016 referendum, Brexiteers were subjected to all sorts of apocalyptic predictions about Britain’s future without the EU. From warnings around economic collapse, to being told the country would be weakened at an international level, pessimism was all the rage.
By far one of Remainers’ most hysterical claims was that the car industry, one of Britain’s most successful sectors, would not survive in a Brexit world. The Society of Motor Manufacturers and Traders proclaimed that leaving without a deal would lead to “permanent damage”, and The Guardian cautioned of “existential terror” among automotive executives.
Yesterday, however, was something of a wake-up call for Project Fear. Japanese carmaker Nissan has announced that it’s shutting down its Barcelona site while keeping its Sunderland plant open (thereby protecting 6,000 jobs). Although this is sad, of course, for those affected in Spain, it indicates how favourable the UK market is seen – contrary to Remainer forecasts.
The news follows reports earlier this month that Nissan is in talks to move the production of two of its Renault models, Kadjar and Captur, from Spain to the site in the North East. The French government is desperately trying to block this, through a €5bn loan guarantee for Renault, but ultimately it doesn’t look good.
The developments at Nissan are extraordinary for two reasons. For one, they signal high confidence in the British market, even in the midst of a pandemic. Coronavirus has badly hit the car industry, with Nissan suffering a £5 billion net loss in the last financial year – its worst result for more than a decade. And yet, in the process of slimming down its operations, the company clearly sees the UK as a safe bet.
The other surprise is that Nissan has previously been critical about Brexit, warning that its entire business “both in the UK and in Europe is not sustainable in the event of WTO” tariffs. These words convinced people that Britain would lose out if the manufacturer had to pick a side – a suspicion that wasn’t entirely flawed given the size of Europe. On the contrary, Nissan has invested over £4 billion in its Sunderland site since the referendum result, including a £52 million new production line, and even planned for a No Deal Brexit. Its long-term commitment to Britain is indisputable.
There are multiple reasons Nissan has gone in this direction. As Ross Clark points out in The Spectator, “Britain is not just a producer of cars, it is a very large market for them, too”. Elsewhere it is suggested that Nissan has spotted a competitive advantage to staying in the country, if rival carmakers face tariffs and it does not. The move could see its UK market share boosted from four to 20 per cent.
But overall it makes sense for it to change its focus from Europe, where its sales have dropped 17 per cent, thanks to a sharp decline in diesel demand. Going forward, Nissan said it will focus on several “key markets”, such as Japan, North America and China. Perhaps the Brexiteers who advocated for a “Global Britain” will be finally vindicated, as well as anyone who was optimistic that Britain could blossom without the EU. Nissan’s decision could inspire many other manufacturers to follow.
Though there have been concerns in recent weeks about whether the UK and EU will reach a trade deal, with both parties playing hardball as negotiations intensify, the Nissan deal couldn’t have come at a better moment for David Frost and his team. Not only does it signal optimism in the UK’s market, but it’s a crucial demonstration of what could happen if the EU does not move closer to Britain’s demands; No Deal might mean Goodbye Nissan. And, as the fanatical Remainers will be able to tell Barnier best, no one wants to lose their car industry.
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