Nissan has confirmed it is abandoning plans to build a new model of one of its flagship vehicles at its Sunderland plant, as it warned that uncertainty over Brexit was affecting businesses.
The Japanese car manufacturer announced in 2016 it would be making the new version of the X-Trail SUV at the factory in north-east England after receiving unspecified assurances about Brexit from the government, but on Sunday it said it would be produced in Japan.
Nissan said it had taken the decision “for business reasons” but cited the impact of Brexit, saying: “The continued uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future.”
It acknowledged in a letter to workers: “Today’s announcement will be interpreted by a lot of people as a decision related to Brexit.” The X-Trail is produced in Japan currently and Nissan said keeping production there would reduce “upfront investment costs”.
The UK business secretary, Greg Clark, said the announcement was a blow to the industry and north-east England.
“Nissan’s announcement is a blow to the sector and the region, as this was to be a further significant expansion of the site and the workforce. The company has confirmed that no jobs will be lost,” Clark said, adding that the government was determined to make the UK car industry a leader in the next generation of electric and autonomous vehicles.
Calling the decision “very disappointing news” for Sunderland and the north-east”, the Unite union said it blamed Brexit uncertainty for the decision, along with the government’s “mishandling” of the transition away from diesel. It expected the company “to work with us to ensure full preparations for Brexit in which jobs and investment are prioritised”.
Nissan said plans over other future models destined for the Sunderland plant – the next-generation Juke and Qashqai – were unaffected by the announcement.
The company’s decision will fuel concern about the economic impact of Brexit, particularly on deprived parts of the country – less than eight weeks before the UK is due to leave the European Union – with some global companies appearing reluctant to make further investment.
The announcement comes days after figures from the Society of Motor Manufacturers and Traders (SMMT) revealed that British car production had dropped to a five-year low in 2018, as manufacturers warned that fears of a no-deal Brexit had prompted a slump in new investment.
Nissan employs about 6,700 staff at the Sunderland site, producing 2,000 cars a day. It has been active since 1986 and is Britain’s biggest car plant, making it one of the region’s key employers. The opening of the Nissan plant in the mid-1980s marked the revival of a UK car industry that makes some of the world’s most renowned brands, including Mini, Jaguar Land Rover, Toyota, Honda and Bentley.
Since the plans were linked to greater investment, the move is not expected to have a significant impact on jobs, although Unite’s assistant general secretary, Steve Turner, referred to hundreds of new jobs and apprenticeships being lost because of the move.
Unite said it wanted to reassure its members that job levels at the plant would remain the same, even though they were being cut elsewhere in the industry. However, it added: “We remain seriously concerned, though, that the apprenticeships and additional jobs that come with future investment, and which this community so desperately needs, will be lost.”
Nissan said the company had decided to “optimise its investments in Europe” by consolidating X-Trail production at its Kyushu plant in Japan, which is the model’s global production hub.
Hideyuki Sakamoto, Nissan’s executive vice-president for manufacturing and supply chain management, said: “A model like X-Trail is manufactured in multiple locations globally and can therefore be re-evaluated based on changes to the business environment. As always, Nissan has to make optimal use of its global investments for the benefits of its customers.”
Gianluca de Ficchy, Nissan Europe’s chairman, said that with the X-Trail already manufactured in Japan, “we can reduce our upfront investment costs”.
He added: “We appreciate this will be disappointing for our UK team and partners. Our workforce in Sunderland has our full confidence and will continue to benefit from the investment planned for Juke and Qashqai.”
Other Nissan models built at the site include the electric Leaf.