Nissan almost certain to shed jobs, insists expert

Nov 4 2008 by Karen Dent, The Journal

IT IS “almost inevitable” that Nissan will be forced to shed jobs in the next 18 months if the recession in the car industry is as devastating as experts have predicted.

The grim forecast came from leading automotive analyst Professor Garel Rhys, who spoke out after the Japanese car firm revealed a worldwide 40% fall in income and a 47.8% slump in operating profits for the first half of its financial year.

Prof Rhys, director of the Centre for Automotive Industry Research at Cardiff Business School, said: “If the recession is as deep as I think it is going to be, it is possible there will be job losses. All car companies are looking at this at the moment.

“I know Nissan is doing everything possible, but if the cars are not being bought, there is no need to make them. If this continues, it is almost inevitable there will be job losses in the next 18 months.”

Nissan, which employs more than 5,000 at its Washington factory, cut production of the Micra and Note models last month. Production of the Qashqai, including a third shift introduced earlier this year, is continuing as normal.

The car maker revealed a worldwide fall in income to £614m in the six months to the end of September, while operating profits dropped to £928.9m in the six months to September 30.

It also slashed its full-year operating profits forecast to £1.68bn from £3.42bn, and its net profit forecast to £997m from £2.1bn. Nissan president and chief executive Carlos Ghosn said: “The global financial and economic crisis has had a profound effect on every area of our industry, with the grip on credit and declining consumer confidence being the most damaging factors.

“Since we see no relief in the second half, we are taking all necessary and responsible measures to protect the company and preserve out ability to rebound when conditions improve.”

The move to reduce capacity at Sunderland is part of this plan, according to Wearside-based Trevor Mann, Nissan’s senior vice president for manufacturing – Europe.

He said: “As a plant, our announcement in October to remove some production from our Micra/Note line and reduce volume on certain models to the end of the financial year, represents the kind of prudent and timely action needed to help protect the future of the company. The market remains highly volatile and we will take further action if necessary, however Sunderland currently remains on track to achieve a second successive record production year.”

Despite the financial slump, the number of Nissans sold worldwide rose by 4.7% to 1.9m during the first half of the year. European sales rose slightly but fewer Nissans shifted in the US and Japan.

UK production increased by 20.1% to 211,855 in the six months to September, mainly due to the introduction of the new Qashqai+2 model at Sunderland.