Nissan backs UK plant but protests erupt in Spain

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Nissan's UK factory in Sunderland will stay open as the Japanese carmaker carries out a global restructuring amid the coronavirus pandemic.

The carmaker also announced it will close its factory in Barcelona with the loss of about 2,800 jobs, prompting protests at the Spanish plant.

Hundreds of workers gathered as burning tyres blockaded the site which Nissan said would close from December.

Nissan is cutting production amid falling sales and rising losses.

On Thursday, the carmaker revealed a $6.2bn (£5bn) net loss in the last financial year - the worst result for more than a decade.

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Nissan is part of a three-way alliance with Renault and Mitsubishi, which are restructuring global operations to enable them to work more closely and cut costs.

As part of its plans, Nissan said it would focus on several “key markets”, including Japan, North America and China.

Its boss said that it will “sustain” its presence in Europe but will leave more room for alliance partners there, such as Renault.

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The Sunderland plant employs about 7,000 people

There has been speculation that Renault could switch some production to the Sunderland factory.

Nissan chief executive Makoto Uchida said the company would maintain production at its Sunderland plant.

It will begin building cars there again in June, after production was paused due to coronavirus-related lockdown measures.

Before the suspension, the factory was preparing for production of the next-generation Qashqai, due out next year. The factory, the UK's biggest car plant, employs about 7,000 people.

'Difficult decision'

Mr Uchida described the closure of the Barcelona factory as “a very difficult decision”.

The factory and its nearby facilities employ about 3,000 workers, but the closures could indirectly affect as many as 22,000 jobs, unions have said.

“The loss of the jobs of our Spanish colleagues is a regrettable reminder that automotive manufacturing is facing tremendous challenges,” said Steve Bush, national officer for automotive at the Unite union.

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Protestors burned tyres in front of Nissan's plant in Barcelona which is being closed down

Some staff in the Barcelona plant started an indefinite strike in early May after initial plans outlined a 20% cut to the workforce.

Mr Bush added that Unite is seeking assurances from Nissan “that the cost-cutting measures spoken about will not impact on our members' jobs, terms and conditions or other benefits at Europe's most efficient plant, Sunderland.”

'Sigh of relief' for Sunderland workers

This is good news. For today, Nissan workers can breathe a sigh of relief that Sunderland has been recognised as an important production facility for the future.

However, lots of questions remain. Nissan has identified Japan, North America and China as “core” markets - not Europe. In Europe, Nissan's alliance partner Renault will assume a greater role and influence in Europe at a time when the global car market will have to make very aggressive cost reductions.

The question may arise in the future - who is really in charge in Europe？ If it's Renault, what does that mean for future investment in a post-Brexit UK？ Nissan alone said it had capacity to make seven million cars when it only needs capacity for five million.

Only plants that can demonstrate an ability to be ruthless about cost will continue to attract investment. As Professor David Bailey tweeted this morning: “Once again, the workforce will have to pull out all the stops to work flexibly to get costs down”.

So, some belt tightening ahead, but workers in Sunderland will be thankful they are not in the same position as their counterparts in Spain and Indonesia, where plants closed down.

Drop in sales

On Thursday, Nissan also outlined plans to reduce the range of models of cars and trucks available in order to cut costs.

It said it would reduce the number of models from 69 to about 55 over the next few years, focusing instead on electric vehicles and sports cars.

Nissan said that worldwide sales of its vehicles between January and April had dropped by 31.1% in comparison with the same period last year.

But even before the Covid-19 outbreak, Nissan's sales and profits had been falling, forcing it to pull back from the ambitious expansion plan devised by now-ousted leader Carlos Ghosn.

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Ex-Nissan boss Carlos Ghosn fled from Japan to Lebanon in December

The carmaker's operating profit had tumbled for four years in a row as it chased market share, particularly in America, leading to overcapacity at its car plants and steep discounts.

The pandemic added yet more pressure on the company to step up its cost-cutting efforts. On Thursday the company said it was too difficult to forecast its performance in the next year due to the coronavirus pandemic.

Mr Uchida said that the firm's key focus during the pandemic was now to “pursue steady growth”, instead of the massive sales expansion it pursued in the past.