Rumbles of discontent with the UK abounded at the Paris Inter-national Motor Show in October. Carlos Ghosn, chief executive of Nissan, implied to British journalists that the company's Sunderland (England) plant -- Europe's most productive auto plant -- would likely close if production of the new Micra model was moved from northeast England to plants in France or Spain.
The reason behind Ghosn's remarks is the fact that the UK has made no move toward joining the Euro, and the strong British Pound is making it economically unsound to do business there. "This is about the willingness of Britain to safeguard itself as a manufacturing base," he explained. "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 cost efficient."
Ghosn is not alone. Several automakers have voiced concerns about keeping their plants open in the UK, including Ford, Toyota, Honda and others.
Long Live the Pound?
As a result, the British government has been strongly considering its options for adopting the Euro. "The short answer is that we're in favor of joining a successful European currency," says Peter Marshall, the British Consulate General in Atlanta. "But the government has said that before we join, the economic conditions have to be right and have be in the UK's economic interest."
There are three stages the UK must complete before joining, reports Marshall. First, the government has set forth a number of economic tests that look at such issues as what effect will adopting the Euro have on UK jobs, on inward investment and on UK industry? Once the government considers the impact and decides to move forward, the issue will then move to Parliament, "where there will be quite a lengthy debate," adds Marshall. "Assuming then that the Parliament agrees, it will be put to a referendum for the entire British population."
However, Marshall insists that the British government is not being complacent. "We are concerned about the pressures on manufacturers," he adds. "Even though we've had a very successful track record in the past for automotive investment, we can't afford to be complacent. This is one of the most serious decisions that will be undertaken in the UK in quite a long time, but it has to be a benefit to the British economy."
UK Investment Continues
Despite the fact that many auto manufacturers are concerned with the affordability of operating in the UK, automotive investments and re-investments continue to pour in.
For example, Dearborn, Mich.-based Visteon Corp., a full-service automotive technology supplier, announced plans in November that it will develop its largest UK independent technical site and new UK headquarters at Basildon, Essex, in eastern England. Construction of the 215,400-sq.-ft. (20,000-sq.-m.) facility is scheduled for completion in 2002.
SPX Contech, a producer of aluminum steering and power train components for the auto industry, also announced it would invest US$27 million for a new European manufacturing facility at Welshpool, Wales.
Marshall lists several reasons for the continued investment in the UK, including the quality work force, training availability, and low labor costs and corporate tax rates compared to other European locations. He adds that auto manufacturers also have the ability to trade in Euros even if the country has not taken part in the new monetary unit.
"Several big companies are trading and conducting business in Euros," he explains. "Companies like Vauxhall, a General Motors subsidiary, and Nissan already do it."
---Tracy Heath
