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Nissan hits out at Brexit 'uncertainty' as it confirms new X-Trail to be made in Japan not Sunderland

Nissan has taken a swipe at Brexit "uncertainty" as the car giant confirmed in a letter to workers that the next-generation X-Trail, planned for its Sunderland plant, will instead be made in Japan.

The decision is another huge blow to the UK's car industry which has been warning for years about the impact of Brexit uncertainty on top of other problems such as a slump in diesel sales.

Nissan has confirmed that no jobs will be lost at the plant, but anticipated future roles required if the X-Trail were to be made in Sunderland are likely to not be created.

In a letter to workers, Nissan Europe chairman Gianluca de Ficchy said much had changed since the Japanese firm announced plans to build a new Qashqai and X-Trail in the UK in October 2016.

As well as changing diesel emissions regulations and a slump in sales, the "announcement will be interpreted by a lot of people as a decision related to Brexit," Mr de Ficchy said.

"We have taken this decision for the business reasons I've explained, but clearly the uncertainty around the UK's future relationship with the EU is not helping companies like ours to plan for the future."

The letter continued: "With the UK's departure from the EU on March 29 getting closer every week, we have a taskforce in place, reporting to me, that is considering all of the possible scenarios and the potential impact on the business.

"As a responsible business with 16,000 employees in the region, I want you to know that we are preparing across all functions, and with our supply chain, for anything that might impact our current business model.

"When the time comes to initiate any of those plans, we will be ready, and we will communicate with full transparency to all of you."

The reported U-turn is 'deeply troubling news', according to one local MP. Credit: PA

Nissan's announcement comes just days after a the world's biggest trade deal came into force between the EU and Japan, which will see Japan able to export cars (as well as many other goods) into the EU tariff-free by 2027.

As uncertainty surrounding the UK's deal with the EU continues, there are fears that cars made in the UK could receive a hefty 10% tariff if they are exported to Japan.

  • ITV News Correspondent Angus Walker says that Nissan appears to no longer believe the assurances they received from Downing Street in the wake of the Brexit vote

In 2016, the Japanese car-maker said it would build the models at the UK-based plant after receiving "assurances" from the government over Brexit.

Nissan had voiced concerns about Brexit before finally committing to build the new Qashqai and X-Trail models in its North East factory in October 2016, four months after the EU referendum.

The decision secured thousands of jobs in the Brexit-backing city, but prompted a volley of questions over whether a so-called “sweetheart deal” between the car-maker and the Government had been struck to protect the manufacturer from any post-Brexit EU tariff wall.

Ministers strongly denied any financial incentives were offered and Chancellor Philip Hammond said any costs arising from the assurances would be small enough to be covered within the Department for Business’s existing spending limits.

The Sunderland plant, which has been active since 1986, employs almost 7,000 people, and produces around 2,000 cars a day.

Other models built at the site include the Qashqai, Juke, Q30, Note and the zero-emission electric Leaf.

Nissan still intends to invest heavily in the new Juke model and the next-generation Qashqai, Mr de Ficchy said.

Labour leader Jeremy Corbyn said the threat of a no deal Brexit is damaging the economy. Credit: PA

Reacting to the announcement, Labour leader Jeremy Corbyn said: "The Conservatives' botched negotiations and threat of a no deal Brexit is causing uncertainty and damaging Britain's economy."

Sharon Hodgson, Labour MP for Washington and Sunderland West, described Nissan's decisions as "a great loss of future investment in Sunderland and I am sure that many people will share my huge disappointment and concern at this news.

"Tomorrow, I will be seeking answers from Government Ministers as a matter of urgency."

Sunderland Central MP Julie Elliott attacked the plan as "devastating for our city and the wider North East".

The Labour MP continued that the creation of the X-Trail at the Sunderland plant would have created "hundreds of much-needed extra jobs", and the future of the plant was now "less stable".

Ms Elliott also highlighted what she called the "inevitable role that Brexit has played in this", and criticised the Government for the continued "uncertainty" surrounding the UK's departure from the EU.

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Unite officer Steve Bush called Nissan's decision "very disappointing news for Sunderland and the North East, and reflects the serious challenges facing the entire UK auto sector.

"The Government's mishandling of the transition away from diesel allied to the continuing uncertainty around our future trading relationship with the EU are extremely unhelpful when the sector ought to be focused on preparations for electrification.

"While this decision is naturally not good news, we want to reassure our members that job levels at the plant will remain the same, even though they are being cut elsewhere in the industry.

"However, 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."

Business Secretary Greg Clark said: "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."

Some 7,000 people are employed at the Sunderland plant. Credit: AP

Nissan is part-owned by French manufacturer Renault, which had led to concerns that production could be moved to France to avoid any tariffs which might be introduced on exports to the EU if the UK leaves the single market in a hard Brexit.

The U-turn comes as figures show car production slumped by almost a tenth last year, leaving the industry on “red alert” amid continued Brexit uncertainty.

A report by the Society of Motor Manufacturers and Traders (SMMT) said investment had effectively “stalled” amid fears over the UK’s future trading prospects with the EU.

Just over 1.5 million cars left UK factories in 2018, a 9.1% decline on the previous year, and the lowest for six years.

Production of diesel cars was down by 22% to 561,000 last year.

SMMT chief executive Mike Hawes said the fall in investment was “deeply depressing” and should send a strong signal to politicians to secure a Brexit trade deal.

The decision by Nissan comes just weeks after a triple jobs blow in the UK car industry.

Earlier this month American car manufacturer Ford confirmed nearly 400 jobs would be lost at its engine manufacturing plant in Bridgend.

The company said the “voluntary separation programme” at the Welsh factory is needed to cut costs and create a “sustainably profitable business” in Europe.

It followed a similar move by Jaguar Land Rover to reduce its 44,000 workforce by 4,500 under plans to make £2.5 billion of cost savings.

Most of the cuts will be in the UK, with a voluntary programme being launched, and are in addition to 1,500 workers who left the company last year.

Japanese firm Honda also announced six non-production days in April under contingency plans to mitigate the risk of disruption to production at its Swindon factory after the UK leaves the EU.