Nissan to Try Making Cars in England : Expects to Avoid the Low Productivity Hurting British Firms

“In the next 11 years, tens of thousands of Nissans should be exported by a small island with a highly skilled work force,” proclaimed a double-page advertisement by the giant Japanese car maker.

The small island is Britain, not Japan.

The decision by Nissan, the world’s fourth-largest vehicle manufacturer, to build a $70-million plant in England’s depressed northeast has been seen as heralding a revolution in British industrial organization and labor practices.

It has jolted domestic car firms, which are struggling to overcome low productivity, overmanning and poor industrial relations while maintaining their share of a stagnant market.

“This is the opportunity of a lifetime, the chance to establish a British car producer that can operate without a long history of industrial strife hanging around its neck,” said Nissan Purchasing Director Ian Gibson.

“We aim to make cars like the Japanese, efficiently, without strikes, without demarcation disputes.”

The plant, built on the site of an unused airfield, will begin assembling family sedans from imported Japanese kits next summer at a rate of 24,000 a year.

Local Production

If all goes well, Nissan plans to invest a further $420 million and expand production to 100,000 a year by 1989, by which time 80% of the car’s components should be produced locally.

Western European car makers lost a total of almost $1 billion last year, and analysts agree that the market is already suffering from gross oversupply.

As Robert Lutz, head of Ford’s European division, put it: “We’ve got too much production capacity chasing too few buyers.”

The entry of a new competitor with significantly lower unit costs is likely to exacerbate the problems of firms such as Ford and state-owned BL (formerly British Leyland).

Nissan expects to produce its 100,000 cars with a work force of 2,700. BL’s Austin Rover subsidiary employs 10 times as many but produces only four times as many cars. The company lost $61.3 million before taxes last year.

But when Lutz complained recently that it took 70 man-hours to produce a car in Britain, compared to 35 in West Germany and only 18 in Japan, some 50 workers at a Ford plant near London were so offended that they downed tools and walked out, disrupting production for several hours.

British union leaders say that Japanese production figures are a product of Japan’s unique social system.

Apply Japanese Methods

“We will never be able to reproduce the Japanese society that produces the kind of products they sell,” said Todd Sullivan, a national officer of the Transport and General Workers Union, one of 11 to which Ford workers belong.

But Nissan Personnel Director Brian Carolin believes that much of Japanese industrial practice could be applied successfully in Britain.

“The company has made it clear that flexibility, teamwork and commitment to the product must be a key part of our operations here,” he said.

A former industrial relations officer with Ford, Carolin said that most of his time there was taken up with “firefighting” to prevent minor disputes from exploding into full-scale strikes.

“That won’t happen at Nissan,” he said. “If it does, the company will cut its losses and pull out.”

The company has flown about 110 key workers to Japan for two- to three-month training courses to hammer home its message.

It has also signed a single union agreement with the moderate Amalgamated Union of Engineering Workers that it says should make disputes and redundancies unnecessary.

Carolin said all Nissan workers from managing director down would wear the same clothes, work the same hours, share the same cafeteria and enjoy the same vacation and welfare benefits. Production workers would not clock in or out.

“Supervisors will take tea with their blokes, and there will be daily meetings to discuss each day’s tasks,” he said.

With unemployment in the region running at 25%, the company has found no difficulty in attracting workers willing to accept its conditions.

Carolin said it received more than 11,000 applications when it advertised 250 jobs recently.

“It allows us to be very selective, to make sure we are hiring the right sort of people for our concept,” he said.

Gibson said the company would demand the same commitment from suppliers, who would be asked to improve productivity year by year in exchange for the security of long-term contracts.

“I can understand why some other manufacturers see us as a mortal threat,” he said. “I don’t. I see us as good, healthy competition.”