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The BBC's Marcia Hughes
"The car plant is a far cry from the UK plant in Sunderland"
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Wednesday, 17 January, 2001, 10:01 GMT
Nissan Micra, French style
Renault car plant, Flins , France
The rather decayed looking French car plant does not seem the ideal location
Most Nissan cars sold in Europe are not Japanese, but British. Soon, though, some of them could be French.

Bosses at Nissan are worried that it would not be cost effective to build the new Micra model at the UK plant in Sunderland, even though it is the most productive in Europe.

That is mainly because of the strength of sterling, which has raised the price of UK cars exported to EU countries who are members of the euro by 30%.

The UK government has promised a 40m aid package for Sunderland, a grant that has been approved by the European Commission. Far cry from Sunderland

But that may not be enough to persuade Nissan's parent company Renault. If Sunderland loses out, the job to build the new Micra could go to a factory on the outskirts of Paris run.

Building the Micra there within the eurozone would not carry the same currency risk.

But the car plant is a far cry from the UK plant in Sunderland. It has an older workforce and less flexible hours, so how would it cope?

In the French village of Flins, north west of Paris, lies the Renault factory where Nissan is thinking of building the new Micra.

At first sight - the rather decayed-looking car plant doesn't seem the ideal location, especially when compared to the state-of-the-art car factory in the UK.

Philippe Martinez, head of CGT union, Renault
Philippe Martinez, CGT union - "we don't need more work, there's too much of it."

But the costs incurred by the high pound have undermined the UK's competitiveness and made the French factory a favourable choice.

Those inside the factory are not receiving the news of more work with open arms. Union leaders say it is a purely economic choice that won't mean more jobs or more money.

"The conditions at Flins are already detestable," says Philippe Martinez, Head of CGT union at Renault.

"People are flexible - they work long hours in very difficult conditions, we don't need more work, there's too much of it."

"We already need to take on more workers at Flins so that conditions are better," he adds.

Major expansion

In order to cope with production of the new model, the Flins plant would also need major expansion. All this, would seem to offset any costs that Nissan might save by choosing to build the Micra there.

As the deadline for deciding looms nearer, some believe Nissan should be examining more than the exchange rate risks.

As regards competition in an already crowded global car market, the Renault alliance with Nissan would be an advantage.

Renault's innovative strategy could play a big role in helping the company gain growth in the sector.

In the meantime, Nissan's first decision will be to decide if the Renault factory at Flins can possibly be more productive than the Nissan plant in Sunderland.

That will ultimately decide who will win the contract for the new Micra.

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See also:

15 Jan 01 | Business
Nissan's Sunderland fears
16 Jan 01 | Business
Nissan aid 'wins approval'
14 Jul 00 | Business
Nissan repeats Sunderland threat
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