Investing in Nissan’s Spanish factory is cheaper than closing it, says industry ministry official

by SpeedLux
Nissan Motor logo

Nissan Motor would find it cheaper to invest in its factory located in Barcelona than to close it, a senior Spanish industry ministry official stated on Monday, pegging the estimated cost of a shutdown at over 1 billion euros ($1.1 billion).

Europe has long been a difficult market for automakers because of overcapacity, tough competition and tight regulations, and economic shutdowns to stem the spread of the coronavirus have increased more pressure.

People with knowledge of the matter have informed Reuters that Nissan may be thinking about shutting down its factory located in northeastern Spain, but has made no decision yet.

Spain’s secretary for industry, Raul Blanco, stated he had received no official confirmation of the automaker’s plans for the plant, which along with related facilities in the area hires 3,000 people. The company is due to reveal a strategy update this week.

“It is much cheaper to invest than to leave,” Blanco stated, adding it would cost the company over 1 billion euros to settle labor and contractual issues in closing what would be its last facility in Europe outside of the UK.

The factory requires around 300 million euros ($329 million) in what he said was overdue investment.

“The situation is very difficult and we have to be realistic,” Blanco informed reporters on a conference call. “Nissan has made no investment in the plant for 10 years.”

Referring to any possible closure, he said: “This is not a friendly situation.”

The automotive industry represents around 10% of Spain’s economic output, according to government trade and investment body ICEX.

“The plant’s situation has worsened but it is entirely competitive if it is put to work and the right investments are made for the next 10 years,” Blanco added.

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