Up to 20,000 jobs could be at risk among Britain’s automotive suppliers following Vauxhall’s shock announcement on Tuesday that it is to cease car production at its Luton plant in 2002. In a letter to Tony Blair this week, tooling suppliers warned of massive knock-on effects from the closure within the industry’s supply chain.
The prime minister was told that many suppliers within the industry had geared their production to the specific just-in-time supply needs of the Luton plant and would find it difficult to find replacement business before the closure of the plant in 15 months time.The letter called for government action to stem the slide in UK manufacturing which it said had been made worse recently by the announcement that Ford was to stop car production at Dagenham and by continuing worries over whether Nissan would build its new Micra at Sunderland.
Chief executive of the Gauge and Toolmakers’ Association Steve Eyles told The Engineer: ‘The impact is frightening. I think the mentality of these corporate giants is scandalous — that they can create partnerships and then walk away from them on a whim.’
Vauxhall chairman and chief executive Nick Reilly blamed over-capacity in Europe for the decision to reduce Luton to van and off-road vehicle production and concentrate UK car production at its Ellesmere Port plant, with the loss of 2000 jobs at Luton.
Production of the Vectra at Luton will be scaled down to one shift next year and cease altogether by early 2002. Ellesmere Port will continue to produce the Astra.
But Reilly said Vauxhall, which is owned by General Motors, was looking at turning that plant into a two model ‘flex-plant’ potentially capable of bidding for the next generation Vectra. Opel’s Vectra plant in Germany is currently favourite for the new model. GM said it would reduce capacity across all its European plants by 40,000 units a year by 2004.
Professor Peter Cooke, head of the Centre for Auto Industries at Nottingham Business School, Nottingham Trent University, said the major impact of Vauxhall’s decision would be felt as GM increased sourcing components from within the eurozone. ‘To be competitive now, companies in the UK have to be 25% more productive than companies in Europe, which is a physical impossibility,’ he said.
Doubts grow over Micra future
Fears that Nissan is about to shift production of the Micra to France grew this week with news that a UK government ‘sweetener’ will not be cleared in time for a key decision on the future of the model.
The Nissan board, headed by president Garlos Ghosn, a former chief operating officer of Renault, will decide in January whether the next generation Micra will be produced at Sunderland or at Renault’s Flins plant in France. This week the European Commission said that it was doubtful it would rule on the UK government’s £40m grant in time for the meeting.
Nissan has said that it will decide on the location of the plant irrespective of whether there is a commission ruling.
Industry observers believe that the company would find it impossible to justify the near £200m investment at Sunderland without the aid package.
The loss of the Micra to Flins would mean the axing of up to 1,300 jobs from Nissan’s 5,000 Sunderland workforce and reducing it to a two-model factory, producing the Primera and the Almera.
Despite being the most efficient car plant in Europe, Sunderland has to find 30% cost savings during the current financial year to offset the burden imposed by the low value of the euro against sterling.