Exchange rate may jeopardise car plants

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The Independent Online

A huge cloud was hanging over two major British car plants last night after the bosses of Nissan and Ford warned that exchange rate uncertainty and union militancy could sound the death knell for their Sunderland and Dagenham factories.

A huge cloud was hanging over two major British car plants last night after the bosses of Nissan and Ford warned that exchange rate uncertainty and union militancy could sound the death knell for their Sunderland and Dagenham factories.

Carlos Ghosn, the president of Nissan, gave the clearest signal yet that unless Britain gives a commitment by Christmas to enter the euro then the Japanese car maker would scrap plans to build a new Micra car at Sunderland, casting doubt over the future of the entire plant and its 5,000-strong workforce.

Meanwhile, Jac Nasser, Ford's chief executive, indicated that Dagenham could close entirely if unions take industrial action in protest at the decision to end car production there.

Speaking on the opening day of the Paris Motor Show, Mr Ghosn said the decision to build the next small car was important not just for the Micra but for "the future of the UK as a manufacturing base for Nissan".

He said that a decision would be taken in December or early January and the "critical" factor would be whether Nissan could look forward to a stable exchange rate for the pound. The best way to achieve this was to commit Britain to the single currency.

Mr Ghosn, who was dubbed "le cost killer" while at Nissan's parent company Renault, said that even if Sunderland secured the approval of Brussels for a £40m grant to build the Micra and achieved a 30 per cent improvement in efficiency, it would still not guarantee the investment in the new model.

A stable exchange rate was essential he said adding: "It depends on the willingness of the UK to safeguard itself as a manufacturing base. Sunderland losing the Micra is not my preferred solution but I cannot go against the economics. It is the most productive car plant in Europe but it is not our most efficient."

The Nissan boss said he had made the seriousness of the situation clear to Tony Blair when he met the Prime Minister in July. "There was no misunderstanding," he said, "we explained the logic behind the Micra decision and we said this logic can repeat itself when the time comes to replace the next model."

Ford has already announced the end of Fiesta production at Dagenham in early 2002 with the loss of 3,500 jobs. But Mr Nasser said that union militancy could jeopardise Ford's decision to make the Essex plant a world centre for diesel engine production safeguarding 2,300 jobs.

Mr Nasser said labour stability had been "an important part" of Ford's decision to invest a further £400m at Dagenham raising engine production to nearly one million units a year. Asked whether Dagenham could lose engine production if strike action went ahead, he replied: "It's not our preference but there are always other options. This is not a threat but a fact of life."

A strike at Dagenham would cripple output at Ford factories elsewhere in the UK and on the Continent hitting production of the Ford Focus in Saarlouis, Germany, the Mondeo in Genk, Belgium, and output of the Transit van in Southampton.

Mr Nasser is refusing to meet union leaders and Ford of Europe's boss Nick Scheele reiterated that there was no chance of a reprieve for car manufacturing at Dagenham.

Shop stewards have agreed to hold a ballot on industrial action probably in the third week of October and expect to get overwhelming support. Sir Ken Jackson, general secretary of the AEEU engineering union, accused Ford of reneging on its promise in 1997 to build the new Fiesta at Dagenham. "If there is industrial action it would be extremely regrettable but there is still an opportunity for Ford to change its mind. We cannot have a partnership which is one sided," he said.

If the threat of industrial action is lifted, Mr Scheele held out the prospect of Dagenham sharing in a major expansion of Ford's European operations. It intends to invest $6bn (£4.2bn) introducing 45 new models over the next five years and Mr Scheele said his "vision" was to introduce 24-hour working at all of Ford's seven car and engine plants across Europe.

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