Crash-Out Brexit Could Force Closure Of Sunderland Car Plant, Warns Nissan Boss
If the U.K. crashes out of the EU at the end of the month the chairman of Nissan Europe has said he could not rule out the closure of Nissan’s factory in Sunderland.
Gianluca de Ficchy told ITV Tyne Tees on October 10 that he cannot yet give a precise answer on the future of the Sunderland plant. Sunderland was the first U.K. city to release the results of the Brexit referendum in June 2016—its residents voted to leave the EU.
Ficchy told the local TV news station that the tariffs that could be imposed after a no-deal Brexit would make the plant unprofitable.
“If no deal means tariffs, our European business model will be in jeopardy,” he admitted.
Ficchy was speaking to journalists on a press tour of the Sunderland plant. He told the BBC that “if a no-deal [is] associated with the application of 10% duties under the WTO rules, that will create an enormous problem for the overall European activities of Nissan Europe.
“If we will have to sustain 10% export duties on the vehicles that we export from U.K. to EU, knowing that those vehicles represent 70% of total production, the overall business model won’t be sustainable.Today In: Industry
“It’s not a question of Sunderland, it’s a question of the overall economic sustainability of our business [in Europe].”
His comments came after Nissan announced October 9 that it was ending the plant’s nightshift. 70% of the Juke cars assembled in Sunderland are currently exported to the EU, with production relying on just-in-time frictionless trade.
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Car industry bosses have long issued dire warnings about Brexit—specifically, no-deal Brexit. Earlier this year the CEO of car parts supplier Unipart John Neill said that if the U.K. were to leave the European Union without a deal the resulting disruption could cause a “cascade of failure” in the supply chain.
Such warnings often lead to cries of “Project Fear” by Brexit supporters. (Project Fear was the label given to pre-referendum warnings from industry and the U.K. government that Brexit would result in severe economic pain.)
Leading Brexiters often state they know how to run complex industries better than industry bosses. In January, during an interview with presenter Nick Ferrari on LBC radio, the then foreign secretary and now Prime Minister Boris Johnson suggested that he knew more about car manufacturing than Ralf Speth, the boss of Jaguar Land Rover.
“I would suggest [Speth] knows more about car manufacturing than you do,” pointed out Ferrari.
“I’m not certain he does,” replied Johnson, who has lately said he will take the U.K. out of the EU by October 31 “do or die.”
If Johnson is successful, most industry analysts believe the U.K. economy will take an instant hit leading to a long-term decline. The auto industry would be one of the sectors hardest and soonest hit, believe experts, including some Brexiters.
Economist Patrick Minford, one of Brexit’s keenest cheerleaders, has long claimed that Brexit would destroy U.K. car manufacturing, and that this would be a necessary corrective. In 2012 Minford told a parliamentary committee that the U.K. leaving the European Union would result in the automotive sector suffering a “big transitional loss.”
Minford also claimed that there would be more “gainers than losers” because cheaper imported cars would flood into the U.K. He agreed this would all but destroy U.K. car manufacturing. Minford is professor of economics at Cardiff Business School, a former advisor to Margaret Thatcher and supporter of the U.K. poll tax introduced in 1989 and which led to riots in 1990. He headed the pro-Brexit campaign group Economists for Free Trade (EFT), formerly known as Economists for Brexit. This group denied climate change, preferring neoliberal-style environmental deregulation, and pushed for a no-deal Brexit.
Giving evidence in a Foreign Affairs Committee session in 2012, Minford agreed that the U.K. automotive manufacturing industry would be destroyed.
“You are going to have to run it down,” he said. “It will be in your interests to do it, just as in the same way we ran down the coal and steel industries,” admitted Minford.
Leading Brexiter, and current Leader of the Commons, Jacob Rees-Mogg is an admirer of Professor Minford’s work, once arguing that he “deserves to be listened to because of his remarkable track record.”
The great majority of economists disagree with Minford’s views. While most Brexiter politicians still claim that the future for the U.K. leaving the EU is one of “sunny uplands” many now admit that a no-deal Brexit will impact adversely on the U.K. economy, yet continue to push for departure.
The U.K. automotive industry employs 856,000 people and accounts for 12% of U.K. exports.