10:53am Tuesday 16th February 2010
As one Japanese car producer sees itself at the centre of a storm, Business Editor Owen McAteer predicts good times ahead for Nissan and its Sunderland plant.
ALACK of gloating over the predicament of Toyota was noticeable among the Nissan executives gathered at a military base in Paris last week, for the launch of the company’s new Juke model.
Most refused to be drawn into questions from journalists about their rival firm, choosing instead to focus on Nissan’s position.
While Toyota dealt with the highly damaging publicity surrounding the recall of cars, Nissan had brought 250 or so journalists to the French capital to produce the sort of publicity any manufacturer would want, a positive reaction to the launch of a new model.
It was perhaps appropriate the event was held in a wind tunnel, a fresh model to blow away many of the cobwebs that have surrounded the car industry during the economic downturn.
It was an upbeat affair and most of the motoring journalists were pleased by what they saw, something that delighted Trevor Mann Nissan’s senior vice-president for manufacturing in Europe, based in Sunderland.
He said: “The most striking thing is watching people’s reactions, they are an indication of what car you are going to get.”
There is no doubt that if the Juke is anywhere near as successful as the Qashqai, also produced in Sunderland, then Nissan will be delighted.
Driven by the Qashqai, the company is enjoying rising sales and an increasing share of the European market.
The Qashqai has been a phenomenal success and last month, Nissan said it would be taking on 400 additional workers in Sunderland to keep up with demand for the model.
Those workers, on temporary contracts, will make up a third production shift working through the night from May.
And as Mr Mann, pointed out last month: “The intention is not to build a stockpile of cars, it is to fill the back orders.”
What is most remarkable is that only 12 months ago, like most car manufacturers, the future was not looking quite so bright for Nissan.
In January last year, on the back of a massive decline in the automotive sector and plummeting new car sales, Nissan cut 1,200 jobs at its Sunderland plant, 800 permanent and 400 temporary staff.
It was followed in March by a pay freeze and the announcement in May that Nissan had made a loss in 2008 of £1.58bn.
But since that low point there has been a dramatic As one Japanese car producer sees itself at the centre of a storm, Business Editor Owen McAteer predicts good times ahead for Nissan and its Sunderland plant IN CHARGE: Senior manager Trevor Mann, and above NORTH-EAST MANUFACTURING: The Juke made its world debut at the Paris Motor Show. It will replace the Micra production line at the Japanese firm’s Sunderland plant and bolsters the region’s left, talking to the world’s media at the launch in Paris case for the right to build a new Nissan electric car from next year It is a very special car, and one that I believe will have a big impact on the market as Micra did 18 years ago Trevor Mann ‘ GLOBAL SELLER: Juke will be manufactured in Europe at Nissan’s factory, in Sunderland, above, and in Oppama, Japan. In Europe, its production alongside the Note compact family car and Qashqai crossover is the result of an investment in excess of £52m turnaround. As the Government’s scrappage scheme, introduced in May, started to take effect, sales improved and the company was able to rehire 350 staff on temporary contracts.
Led by the Qashqai, Nissan saw a 17 per cent increase in its new car sales last year compared to 2008.
At the Juke launch Colin Dodge, the former head of the Sunderland plant and now a board member based in Japan, told the audience that Nissan was excited about its future and the vehicle’s launch came the day after it announced its third quater results.
He said that between April and December last year the company had made a consolidated operating profit of 1.72bn euros (£1.5bn). The operating loss for the same period the previous year was 660m euros (£574m).
Last month, Nissan had its highest market share in Europe at 3.2 per cent for the past 12 months and its market share has also grown in the US and in China.
Mr Dodge said: “Given the difficult global conditions facing us, we are really pleased about our recent performance.
“Our increased operating profit demonstrates Nissan's plan to consolidate, recover and return to growth is ahead of plan.”
It is also worth noting that when the Qashqai was introduced three years ago, it was predicted that 100,000 models would be sold each year and that was before the start of the recession. Since then, 500,000 have been sold.
Now comes the Juke which, most importantly, secures 1,000 jobs in Sunderland and up to 2,000 more in the Nissan supply chain, much of which is in the North-East.
Securing the Juke is another vote of confidence in the Sunderland factory and like the Qashqai it is British designed and built.
As Mr Mann said at the Juke launch: “We have a recipe that works. It worked for the Qashqai and we have a very efficient plant that provides first-class quality.
When you have all these ingredients you have a success, so why tamper with that.”
It was ironic then that the arrival of the Juke marks the end of Sunderland production for the model the plant built its reputation on, the Micra.
It is a tough act to follow.
Since production was launched in Sunderland in 1992 more than 2.3 million Micras have been made there and it was the first model from any Japanese manufacturer to win the coveted European Car of the Year award in 1993.
Mr Mann said: “Together with the Bluebird, Micra is a model that has become synonymous with the Sunderland plant. Over the years, Micra’s popularity has been responsible for the creation and safeguarding of many thousands of jobs both at the plant and across our supply chain.
“It was also the model that put our plant on the map in terms of being a world class volume producer and exporter.
“From the Port of Tyne we shipped Micra to about 50 world markets, making it a true global success.
“Given that, replacing Micra was always going to be a tough ask, but in Juke we have an outstanding successor. As a crossover combining a sport utility vehicle and a sports car design, Juke is a completely different proposition to Micra and will bring something genuinely refreshing, challenging and unique to the small car sector.
“It goes without saying we will be sorry to see the last Micra come off the line in July, but I know that everyone at the plant is already looking forward to the following month when Juke enters production.
“It is a very special car, and one that I believe will have a big impact on the market as Micra did 18 years ago.”
Most business leaders in the region will hope that Mr Mann’s predictions for the Juke come true.
The importance of the Nissan plant turning out popular cars cannot be underestimated.
As can be seen with the extra shift for the Qashqai the more popular the car, the more jobs it secures or creates both directly and in the supply chain. And that market is only going to get bigger. One of the country’s foremost experts on the automotive industry Professor Garel Rhys, Emeritus Professor of Cardiff Business School, said: “The prospects for the motor industry in the longer term is excellent.
“In the next 20 years we will make more cars in the world than in the previous 110 years.”
An increasing part of that will undoubtedly be low carbon vehicles and that is the next big target for the Sunderland plant.
In the summer, comes the announcement of where Nissan plans to build The Leaf, its electric car for the European market.
Last month, Mr Mann said a decision was likely in May or June. Sunderland has been widely-seen as favourite since the announcement last summer that Nissan’s electric car battery plant will be sited next to the present plant.
The plant will create 350 jobs as well as safeguarding hundreds more in the supply chain.
The Government is also keen to see Sunderland win the work and last July designated the North-East as the UK’s first Low Carbon Economic Area specialising in ultra-low carbon vehicles.
Last year, Nissan senior vice-president Andy Palmer, the Japan-based head of the company’s electric vehicle programme, described the North-East support for low carbon vehicles as fabulous.
But Nissan has been careful to point out in recent months that the Leaf contract is not a done deal and there is still work to do, Sunderland can’t take anything for granted.
What does seem clear is that as the world enters an upturn, Nissan is one of the best placed to take advantage of the opportunities it will bring.
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