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Nissan plant closure in Barcelona: a traumatic exit

The case confirms the change in global strategy by the automotive industry

Nissan workers burn tires on Thursday to protest the announcement that the Barcelona plant will shut down in December.
Nissan workers burn tires on Thursday to protest the announcement that the Barcelona plant will shut down in December.Adria Salido / GTRES

The expected closure of the Nissan plant in Barcelona will have traumatic consequences that are difficult to minimize or conceal. It directly affects around 3,000 workers, and at least another 15,000 indirectly (the unions are talking about 25,000).

Nissan’s departure also increases existing concern about the immediate future of other foreign investments (Ford, Alcoa...) and, once again, casts doubt on the policy of attracting foreign capital that has been developed by successive Spanish governments since the transition to democracy.

The decision is difficult to assimilate for all parties that will be affected. It cannot be entirely blamed on the Covid-19 crisis, since the move comes against the backdrop of a reorganization of production at Nissan, which is in an alliance with Renault and Mitsubishi.

Nissan has benefited from hefty subsidies and tax relief that should have come with an obligation toward the country hosting its production plants

The global automotive market, and more specifically its production sector, is currently standing at a strategic crossroads that will trigger drastic changes in the business structure of car manufacturers. The decision by the French-Japanese alliance to let Nissan focus on the Asian markets and leave Europe to Renault is in line with a global movement in auto production that will lead to more profound alterations in the coming years, in the form of rollbacks, mergers and U-turns in investment decisions.

As is usually the case with traumatic disinvestments, the departing company is being charged with acts of abuse and disloyalty. Nissan has benefited from hefty subsidies and tax relief that should have come with an obligation toward the country hosting its production plants. The argument is irrefutable, yet difficult to pin down.

In any case, this is not a legal problem, but one of general government policy. Entities that are going to benefit from state aid and tax deductions should be bound by provisions of permanence in the country, and by a negotiated preference to ensure the continuity of investment (and thus jobs) in the event of structural changes within the company.

These conditions were not negotiated, and in the current situation, they have not been imposed, either. The common government practice in such cases has been to increase the benefits and the support for companies at the slightest sign of outsourcing on their part. The guiding principle has been to panic at the thought of losing the investment, rather than working toward the creation of a network of shared duties that might prevent capital flight and job losses.

The Spanish government’s strategy in such a traumatic case as this one should go further than a negotiation of survival

The Spanish government’s strategy in such a traumatic case as this one should go further than a negotiation of survival. Today, the Industry Ministry is negotiating until the last minute, defending investment plans to save jobs, and noting, no doubt based on excellent arguments, that the cost of closing the Catalan plant will be higher than the cost of keeping it open with viable projects.

But in a forward-looking strategy, industrial policy should develop plans to incentivize technological change by carmakers, contribute money to environmental research, and dispel existing doubts regarding clean traffic regulations in cities. The strategy of public and private transportation must be developed through an agreement between the government and local authorities. Once transportation policies have been clarified, the auto sector’s business strategies should become safer and more fluid.

This structural change must be achieved while preserving production and employment. It is no easy task.

English version by Susana Urra.

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