Sumitomo to close UK plant

Sumitomo makes parts for the nearby Nissan plant

Japanese firm Sumitomo has said it plans to close its electronics plant in Sunderland, Tyne & Wear, next year.

Sumitomo confirmed that the strength of the pound against the euro was a "factor" in its decision.

The strength of the pound and the euro was certainly a factor in the decision

Sumitomo spokesman David Breese

The manufacturer is to transfer production to its existing factories in Poland and Slovakia where costs are cheaper.

The six-year-old plant employs 500 people making parts for nearby carmaker Nissan as well as other Japanese car firms Toyota and Honda.

About 100 employees are expected to be relocated.

Industry trend

The announcement follows a warning last week by Nissan president Carlos Ghosn that future investment in the UK was under threat because of the strength of the pound and the UK's self-imposed exclusion from the euro.

John Edmonds: "The current level of sterling is no longer sustainable"

Sumitomo spokesman David Breese said: "I think the problems we have experienced are an industry trend, which was highlighted by Mr Ghosn last week.

"There are increasingly pressures in the car industry and the strength of the pound and the euro was certainly a factor in the decision.

"Like many manufacturers we are responding to industry pricing pressures, and have taken the step to bring down costs."

The Department of Trade and Industry said it would work to try to minimise job losses and help redundant employees find new work.

News leaked

The announcement comes after the move was leaked in a confidential memo to the government.

This is a shocking decision

AEEU's Sir Ken Jackson

Officials of Sumitomo Electric Wiring Systems were said to be angry at the disclosure, in a telegram to the Foreign Office earlier this week by Sir Stephen Gomersall, the British ambassador in Tokyo.

The company said it had intended to announce the closure in late August following consultation with unions.

"It is with regret that the company has not been able to utilise the usual channels of communication. This is the result of the press comments following the leak of a government document," a spokesman said.

Sir Stephen's memo, in which he warned of the threat to jobs if the UK stayed out of the euro, said Sumitomo was planning to cut 550 jobs in the Midlands and North East.

Shocking

Sir Ken Jackson, general secretary of the Amalgamated Engineering and Electrical Union said: "This is a shocking decision that will have a terrible impact on an area of already high unemployment.

"We urge the company to look at alternatives. It cannot just walk away from its responsibilities."

John Edmonds, general secretary of the GMB said: "Sumitomo is merely the latest name on the roll call of those companies that have fallen as a result of the high value of the pound.

"The government must start to make clear that the current level of sterling is simply no longer sustainable."