Baroness Thatcher would have been appalled. She would want to know why a Tory government, yes a Tory government of self-proclaimed free marketeers, was writing out a blank cheque in the name of the UK taxpayer to give to a successful, profitable Nippon car company and a Chinese Communist Party-owned firm.
My politics are centre left, but I have Thatcherite tendencies when it comes to state subsidies for failing, poorly managed private sector businesses. Even more so, when it comes to giving a blank cheque drawn on the United Kingdom taxpayers’ account to a successful, profitable company like Nissan and its partner, Envision, a company ultimately owned by the Chinese Communist Party.
Incidentally, it is supposed to be the policy of the government of the United Kingdom to reduce our economic dependence on the People’s Republic of China.
“The plant can be expanded to 35 GW with £1.8 billion of investment by the Chinese battery company”, a statement said.
Electric vehicle (EV) batteries are weight gaining products. The components are relatively light and easy to transport, but the finished battery is neither. It makes sense to manufacture EV batteries close to where they are needed. Nissan only has one car plant of its own in Western Europe, the one in Sunderland.
Nissan is not turning its Sunderland car plant into a battery plant. There is already a battery plant next door, 80 per cent of which has been sold off to Chinese Envision. Nissan are now ‘in talks’ with the UK government on getting tens of millions of pounds of UK taxpayer funded support to tart up and expand this existing plant. A plant in which another foreign company has already been happy to buy an 80 per cent stake.
That Chinese EV battery maker, Envision is to build a $2.4bn plant in France for Renault with the aim of reaching 9 Gigawatt hours (GWh) by 2024 and 24GWh by 2030.
Renault has also signed a Memorandum of Understanding with French start up, Verkor, for batteries. Renault is looking to build one million EVs per year by 2030.
Envision’s investment for its Sunderland plant is £450m with an aim of reaching 9GWh (the equivalent of 100,000 cars) and then ‘if demand for Nissan’s EVs rises sharply it may invest a further £1.8bn to expand capacity to 25GWh’.
In order to switch to EV production in Europe, Nissan needs access to a local supply of batteries for the cars it plans to produce.
Let us now talk about jobs!
This newspaper article reads like a transcribed press release. The article refers to the creation of 6,200 jobs in total.
Nissan ‘may directly create 900 new jobs’, is what it really says. It may also indirectly create 4,500 jobs in its supply chain, but not necessarily all of those jobs would be in the UK.
Given that Nissan already has a supply chain for its Sunderland plant, how many jobs in that chain, not all of which will be in the UK, will be destroyed as it switches over to EV production?
The number that would be destroyed needs to be deducted from the number that might be created (and not all of those jobs will be in the same companies), before one might say with confidence that any new jobs will actually be created in the supply chain in both the UK and abroad.
Nine hundred plus 4,500 equals 5,400, leaving 800 to be explained. These 800 (possible) new jobs will, it seems, be created by Envision in partnership with Nissan as they invest in their existing EV battery plant. One might ask why they have not been added to the 4,500 as they are definitely part of Nissan’s supply chain.
But that way, madness lies.
Jobs safeguarded are not to sniffed at, but they are not on a par with a net creation of jobs. Will the government’s investment in Nissan and Envision’s partnership yield such a net creation?
There is no saying that the 900 new jobs that may be created will not go to existing staff. Arguably, the whole of the government’s blank cheque may prove to have been for a safeguarding operation.
Oh, and somewhere within the figures being quoted for jobs created there may be the weeks of construction required for the battery plant masquerading as permanent employment.
When appraising a capital project for funding it is normal to set aside the number weeks of work required for construction that amount to temporary full and part time employment as well as any staff appointed to look after the structure on completion. Those jobs being integral to the delivery of the project and not outputs of it.
Net job losses!
Nissan has shed 1,500 jobs at its Sunderland plant since 2016. The 900 jobs that might be created by the promised new electric model do not make up for the jobs already lost.
The bins!
The end of freedom of movement has, however, seen increasing labour and skill shortages across the economy. Even bin collections are starting to be affected. Personally, I think pensioners in Sunderland who voted Leave in 2016 and said damn the torpedoes as far as Brexit and the economy are concerned will be more interested in 2021 that their bins are emptied regularly and timeously than in almost anything else.
Maybe Nissan would seek easements of Home Office rules to fill any positions they feel unable to fill with UK applicants – there are no guarantees.
Would Priti Patel loosen her corset in such a scenario and ease her prejudices against (im)migrant workers?
More job losses!
Honda will close its Swindon car plant, directly employing 3,000 folk, this month, July 2021. The Japanese owned part of Honda’s supply chain in the UK will make another 6,000 unemployed. Many of those companies are also closing their UK operations this month.
The UK has now lost its top spot as the host of Japanese automotive manufacturers to Germany, with France and the Czech Republic coming up fast on the rails.
In Erdington, Birmingham, 519 jobs at GKN Automotive’s plant, are to go by the summer of 2022. The work transferred to a plant within the EU.
Unite the union said it and its members were “highly dismayed” that initial government promises of support (to ensure the factory remains open and able to play a key role in the electrification of the UK’s automotive industry), have “so far amounted to nothing”.
GKN Erdington is just around the road from JLR Jaguar, Castle Bromwich. All Land Rover production was transferred from Solihull to a JLR plant in Slovakia a few years ago, now. Jaguar Castle Bromwich is soon to cease producing cars, according to JLR.
The JLR plant in Slovakia has the space to take the Jaguar track from Castle Bromwich.
Border checks!
We do not know how bad things will get with regards to Nissan importing goods and services when the UK finally puts in place checks at its borders to mirror those of the EU.
We do know that Toyota Burnaston’s just in time model “is finely tuned, with components arriving every 37 minutes from suppliers in both the UK and the EU. Lorries that supply the plant contain a collection of different components, not a single job lot of brake parts, for instance. That’s because every car is, in effect, built to order. Customers, including dealers, will select the body style, the engine type and size, the colour, the options, making hundreds of variables.”
And we know “the story behind the crankshaft used in the BMW Mini, which crosses the Channel three times in a 2,000-mile journey before the finished car rolls off the production line.”
We also know that our much-vaunted trade agreement with Japan has made it cheaper for UK companies to import automotive parts from Japan. Moreover, manufacturing businesses that are inside one of the much talked about Freeports can benefit from cheaper imported inputs and components in comparison to those outside the area.
| There is a six-year phase-in period to a permanent state from 2027 for EVs, plug-in hybrid EVs (PEHVs), hybrid EVs and EV batteries. From 2027, the UK can export any number of EVs and PHEVs into the EU market at a zero tariff under the following conditions: EVs must have 55 per cent UK/EU content and must have an originating battery packAn originating battery pack must have either 65 per cent UK/EU content for the sell or 70 per cent for the battery pack. |
Blank cheque?
Nissan Sunderland, a leaky flagship of Global Britain’s post Brexit buccaneering ambitions is too big a vessel to be allowed to sink. The UK Government will struggle with might and main to keep it afloat. It’s a prospectus that does not bode well for other EV ventures in the shipyards, the keels for which have not even been laid.
Never forget that Soapy Sunak, the conman hidden in plain sight, has decided to become a cheeseparing 19th Century Chancellor of the Exchequer.
He wants to balance the books.
Acknowledgement
A particular acknowledgement to Pernille Rudlin of Rudlin Consulting.
