Nissan will cut 1,200 jobs

Jan 9 2009 by Graeme King, The Journal

Pain today will make long-term survival easier

Nissan is right to announce job losses, as it will protect the company’s Sunderland plant for the long term, says Professor Garel Rhys

THE car makers cannot keep giving their workers extended holidays, booking hours to claim back later and on training schemes and so on. It’s going to last too long for that.

This announcement is a realisation that they do have to match output to a long-term decline in demand.

This is sound strategy. Pain today is necessary for the patient to recover rapidly and then be in very rude health by 2012/13.

Nissan is normally very lean in its manning – they are always top of the table for output per man and they want to maintain that efficiency.

They have to reduce costs on the supply side, as what they can’t do is stimulate the market sufficiently to fill the factory again.

We (Nissan and the UK motor industry) need successful Government and EU policy, then eventually recovery of the economy and the end of the credit crunch. It could be the Government gives medium term help, as you are dealing with viable companies here.

This is not British Leyland or the US situation, where you would be helping failing companies.

In Europe as a whole, Nissan’s performance is better than anybody else.

They sold more cars in 2008 than in 2007, but they have been postponing the inevitable decline. Companies like Nissan – and Toyota – are taking early action. They are acting very quickly indeed to get their cost structure right, to minimise their losses and make sure they do not get out of control.

Perhaps the Government should ensure there is finance for the supply chain?

There are SMEs which do not have access to huge funds or sophisticated work practices that big firms do.

Prof Rhys is recently retired director of the Centre for Automotive Industry research at Cardiff Business School