Bail-out of Nissan could be on the cards
Dec 12 2008 by William Green, The Journal
NISSAN could be set for a Government bail-out after stopping production at its Washington plant. The Japanese car company sent all its 3,500 workers home on Tuesday after a 40% slump in sales.
There are fears over the future of 400 temporary workers and thousands more posts in the supply sector.
But when quizzed about Nissan in Parliament yesterday, Business Minister Ian Pearson said help was under “active consideration”.
Mr Pearson told MPs the industry was of “critical, national importance” as he faced cross-party calls to provide immediate help to car suppliers, manufacturers and dealers.
The news came amid the fears of job losses at Nissan and its suppliers in the North East. Mr Pearson also yesterday told The Journal the Government was carefully considering calls from industry chiefs for tax breaks and access to short-term loans.
And Chancellor Alistair Darling indicated he would listen to car companies seeking help rather than letting them collapse like Rover in 2005. He hinted strategically significant firms that got into trouble may be bailed out, but did not confirm reports that a list of companies had been drawn up.
Pressure has been growing on ministers to act to shore up the UK automotive industry, which employs 850,000 people – including thousands in the North East – and has contributed £51bn to the economy annually.
Senior Tory MP Peter Luff, who chairs the Commons Business and Enterprise committee, yesterday warned of “imminent disaster” for manufacturers and retailers unless ministers provided extra help such as tax breaks.
David Taylor, Labour MP for North West Leicestershire, said: “Factories like Nissan in Sunderland, Honda in Swindon and Toyota in South Derbyshire have components supplied by extensive networks of much smaller firms who lacking significant cash reserves suffer disproportionately as car production is scaled back.
“Does the Minister agree that the possible erosion of jobs in car suppliers of up to 25% will reduce the anchorage of car plants in the UK, with remaining firms sourcing much more from abroad. What steps is he taking to ensure British component firms have the necessary access to credit to enable them to trade through the deepening recession?”
Mr Pearson said the Government was supporting the sector by investment in low carbon research, training and a £1bn loan guarantee scheme, and help for small and medium sized companies. It is also lobbying for around £7bn in European cash for the industry and Mr Pearson has written to automotive suppliers outlining the package of available support.
Quizzed by Liberal Democrat business spokesman John Thurso about a US-style bailout for the British car industry, he said: “There is a case that says we need to do more and we are actively considering this at the moment.”
Sales had “literally fallen off a cliff”, said Mr Pearson with Nissan experiencing a 40% drop in a year and the wider industry experiencing a 36.8% reduction over the same period.
He said: “The integrated nature of the automotive supply chain brings real challenges for suppliers when the automotive manufacturers decide to take extended breaks. We are acutely aware of the pressures that’s causing a number of supply chains.”
Around 200,000 UK jobs were in the supply chain alone, 500,000 in retail and about 180,000 in direct automotive production, said Mr Pearson.
Share
