Brexit’s Impact on Nissan Sunderland Plant Becomes Clearer
Ever since the United Kingdom voted to leave the European Union, the outlook of trade in Britain has been tossed in the air. Brexit negotiations have barely begun, and the UK has yet to invoke the Article 50 that would start the official exit process, so there are no real answers to the questions investors, companies, and individuals have about the future. Japanese automaker Nissan, which has a plant in Sunderland, has remained fairly quiet, but the automaker and its CEO finally spoke out this past week.
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Carlos Ghosn is the chief executive of both Nissan and French automaker Renault, and he spoke with the BBC about the future of the Renault-Nissan Alliance in England. He told the interviewer that he was “cautiously optimistic” about the future of the company in the UK, but he reiterated that the company considers its plant in Sunderland a “European plant based in the UK”. This is because about 80% of the plant’s cars built are exported. Due to the uncertain status of the UK at the moment, and whether it will remain in the free trade area, he declined to comment further as to what could happen to the plant’s 6,700-strong workforce. Earlier, Nissan had commented that it was collaborating with the government to plan for what lies ahead, but “it is in the interest of the businesses and people of the UK that a resolution is reached as soon as possible”. Ghosn also admitted that he believed that the price of Renaults made in Europe would rise in the UK, even before Brexit takes effect, thanks to the lower purchasing power of the pound.
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In the world of the Renault-Nissan Alliance, plants reportedly have to make bids against each other to win new models to be produced at their facilities. Each factory submits a bid to the parent company detailing how much it would cost to make the car there and get it to its final destination. With future tariffs, exchange rates, and foreign relations still unknown, the BBC and many commentators wonder if Sunderland will have to add the price of worst-case scenario tariffs to its bid estimates, or if the plant would even be allowed to participate in the competition for new work. Either scenario would put the Sunderland plant at a serious disadvantage, and could cause it to lose work to European plants in more secure EU states, like France.
Currently, Nissan’s Sunderland plant is home to production of the Qashqai crossover SUV (known as the Rogue in the US), one of the bestselling models in its class. The vehicle is up for a significant refresh in 2020, which means that bidding will begin for production in late 2017 or early 2018. Even if the UK were to invoke Article 50 now to trigger the Brexit, it is unlikely that trade deals would be finalized by that time, which could significantly impact the Sunderland’s ability to bid and keep its main production line.
We hope that the 61% of voters in Sunderland who voted to leave the EU knew what they were getting into, and are ready for the possibility of a reduced workforce at the Nissan plant if bids for new models fail.