Friday, August 28, 2009

Will Nissan unit shift from UK to Chennai lead to job losses?

Japanese major Nissan has decided to shift the entire production of its small car Micra from the UK and relocate it to India. After production of the Micra begins here, Nissan plans to manufacture four more models in India, involving a total investment of over Rs 2,000 crore.

The move underlines the rush among automakers to rationalise production costs and move to locations that offer the best value and quality. “We have decided to shift the production of the Micra compact car from our UK plant and manufacture it in India at our upcoming factory at Oragadam, near Chennai,” Nissan India MD and CEO Kiminobu Tokuyama told TOI here.

The company’s Chennai plant will start production from May next year, and the export markets would be catered to from autumn, Tokuyama said. Nissan, he said, plans to meet Micra’s requirements for the entire European region as well as some other markets like Middle-East from the Chennai plant. “We plan to initially start with export volumes of 1.1 lakh units, which would be gradually scaled up to 1.8 lakh units as demand goes up,” Tokuyama said. But what has prompted the company to take such a step, uprooting manufacturing presence from an established base and shifting to an all-new location. “There are many benefits to count in India, and these include a high-quality vendor base that is also cost effectiveness, leading to globally-competitive pricing,” Tokuyama said. Also, the technological skills in India are of a high quality, he added.

Nissan’s move points to the growing importance of India in small car manufacturing, which was initiated by the Government by way of lower manufacturing tax (excise duty) on them. The rising scale of small car production in India also sweetens the deal in favour of the country as component makers have improved on quality and scale, making them a safe and a reliable bet. Lower wages in the market, and relatively high engineering skills, is another big advantage that attracts companies.

Times of India/Agencies

1 comment:

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