Nissan £61m in doubt after investment U-turn

Reuters

Reuters

Nissan has cancelled plans to build the next-generation X-Trail at its Sunderland factory, blaming the diesel sales downturn and Brexit uncertainty. It cut hundreds of jobs at its Sunderland factory in the north of England, Britain's biggest vehicle plant, a year ago as output slumped 11 percent, hit by levies and crackdowns on diesel.

Clark said 740 new jobs were due to be created by the X-Trail investment but none of the existing workforce would be hit by the decision to pull the model, which will exclusively be built in Japan.

A letter from the chairman of Nissan Europe to Sunderland factory staff, which has been obtained by Sky News, confirmed the news and telling them the model will continue to be made in Japan.

"We appreciate this will be disappointing for our United Kingdom team and partners", Nissan Europe Chairman Gianluca de Ficchy said.

The company had said in 2016 that it would produce the new X-Trail model at its Sunderland factory after getting reassurances from the government over Brexit - an intervention hailed by Prime Minister Theresa May as a "vote of confidence" in British business after voters backed leaving the EU.

In a letter to workers, it said continued Brexit uncertainty is not helping firms to "plan for the future". Sunderland voted 61.3 percent to 38.7 percent to leave the EU. On Sunday, May and her ministers stepped up their campaign to persuade European Union politicians to change their minds.

Production line at Nissan's Sunderland plant.

Nissan said in a statement that it had "accepted a formal offer from the UK Government in June 2018" that provided grant support to "a number of different projects in our Sunderland plant".

Meanwhile Brexit figurehead Boris Johnson, Britain's former foreign secretary, warned that rumours of an imminent election could be a government "scare tactic" aimed at getting Conservative MPs to support a Brexit deal. "Clearly we will be reviewing it in the light of this decision", a government source told the newspaper.

Nissan, which builds 30 percent of Britain's 1.52 million cars at its factory, the country's biggest auto plant, exports the vast majority of the vehicles to European Union countries and, like the rest of the industry, is anxious about tariffs if there is a no-deal Brexit. The loss of X-Trail production puts the long-term future of the Washington plant in doubt and the additional jobs that would have been created by building the SUV will not arrive on Wearside anymore.

Officials from Unite met with management at the Sunderland plant and expressed their "anger and disappointment" over how the announcement over future production of the X-Trail was handled. Declines have been steepest for diesels like the X-Trail sport utility vehicle that's the subject of the Japanese giant's about-turn.

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