On Long Road Back from Brexit, North-East’s Recovery Rides on Survival of Nissan’s ‘Shining Star’ Plant

The north-east of England has been on a long road back to recovery since the Brexit vote in 2016. At the heart of this struggle is Nissan’s Sunderland plant, a “shining star” for the Japanese carmaker that has faced numerous challenges in recent years. While other factories in the region have shown promise, such as Turntide’s facility in Gateshead with its cutting-edge technology and innovative products, the industry as a whole remains vulnerable to the twin threats of Brexit and electrification.

The Nissan plant, which opened in 1986 under Margaret Thatcher’s investment drive, has been a symbol of British industrial resilience. Despite facing challenges including Brexit-related uncertainty and increased competition from Chinese manufacturers, it continues to produce high-quality vehicles. The deal with China’s Chery, while not yet confirmed, is a welcome development that could secure the plant’s future.

However, the industry is not out of the woods just yet. Nissan’s decision to shelve plans for an electric Qashqai and focus on selling new petrol cars beyond 2035 raises questions about the UK’s commitment to electrification. Analysts are divided on whether carmakers are trying to delay the shift to electric vehicles or respond pragmatically to lower-than-expected demand.

The Brexit Effect

The impact of Brexit on Britain’s automotive industry has been well-documented. The uncertainty surrounding the UK’s departure from the EU has led to significant investment in new models and technologies, but also created challenges for carmakers. The introduction of EU rules of origin, which require batteries made in the UK or EU to avoid tariffs, adds complexity to an already complex supply chain.

Industry insiders are pushing for an extension to the deadline for these rules, but some believe a decision may not be made until December. This uncertainty is compounded by the Industrial Accelerator Act, which will limit public procurement and subsidies to cars “made in EU”. Factories in Britain will be locked out under the current draft, sparking concerns about the future of Nissan’s Sunderland plant.

The Electrification Conundrum

The shift towards electric vehicles (EVs) is a major challenge for the industry. While many carmakers have invested heavily in EV technology, demand has been slower to take off than expected. Nissan, an early pioneer in EVs, has reportedly shelved plans for an electric Qashqai due to lower-than-expected demand.

The government’s proposed watering down of electric vehicle targets, known as the zero emission vehicle (ZEV) mandate, is also causing concern. The existing rules require battery cars to make up 80% of sales from high-volume manufacturers, but the new target could be as low as 50%. Some analysts believe carmakers are trying to delay the shift to electric vehicles, while others see it as a pragmatic response to changing market conditions.

What’s at Stake

The future of Nissan’s Sunderland plant is at risk if made in Europe excludes the UK. Andy Palmer, former global chief operating officer for Nissan, warned that “if made in Europe excludes the UK then I think it’s existential for Sunderland. Sunderland will die.” This would have significant economic implications and threaten the livelihoods of thousands of workers.

Adapting to Change

As the industry continues to navigate the challenges posed by Brexit and electrification, there are lessons to be learned from history. The decline of the UK’s manufacturing sector in the 1980s was a major blow to the economy, and its consequences are still being felt today. It is imperative that policymakers learn from these mistakes and create an environment that supports innovation and investment.

The industry will need to adapt quickly to changing market conditions, investing in new technologies and developing strategies to mitigate the risks posed by Brexit and electrification. While there are challenges ahead, there are also opportunities for growth and innovation. Britain’s automotive industry has always been a beacon of resilience and determination, and it is likely that this spirit will see it through these difficult times.

David Bailey, professor of business economics at the University of Birmingham, noted that “Brexit keeps bringing up these uncertainties. The world is changing, and the EU responds to that, and that affects the UK.” The industry must be prepared to respond to these changes, investing in new technologies and developing strategies to mitigate the risks posed by Brexit and electrification.

Ultimately, it will be up to policymakers to create an environment that supports innovation and investment. By doing so, they can ensure that Britain’s automotive industry continues to thrive, creating jobs and driving economic growth for generations to come.