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Siting Industry

With specific reference to Nissan in Sunderland

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Recall last week, we looked at all the factors that can influence the siting of industry

• The best mnemonic I thought was:

• [to be added before class time]

• Can you remember all the factors?

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Industrial Decline

• As the type of industry and its location change many problems are created in the older industrial areas.

Factories CloseUnemployment Rises

Less income and money to spend in community

People move away

Factories pulled down

Increase in derelict (waste) land

Reduction in Market for Goods & Services

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Industrial Decline• Economic effects - to do with money - unemployed people

have less money to spend, local shops and pubs take in less money, the local government gets less taxes and therefore has less money to spend, services such as schools and post offices are cut back, more people leave and so the area is badly run down.

• Social effects - to do with people - e.g. unemployment, low standards of living, family break-ups, crime, vandalism and depression. As many younger people will move away to look for work the area gets an ageing population.

• Environmental effects - to do with the surroundings - e.g. empty factories and houses, gap sites (where buildings used to be), waste ground and dirty buildings. One positive effect of the old polluting factories closing down is there is less air and river pollution now.

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Regional Differences within the U.K.

• Areas which have depended on the old, heavy industries (coal mining and iron and steel) have low wages, high unemployment and population decline. Areas like these include parts of the North-East of England, Central Scotland and South Wales.

• Areas which have modern, light industries have low unemployment, high wages and population increase. Areas like these include parts of south-east England and East Anglia.

Poor NorthThriving Rich South

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Governments can offer grants to companies locating in declining areas. For example

Samsung was given £58 million for locating in

Teeside.

Governments may set up Urban Development

Corporations or Enterprize Zones. For example the

Teeside UDC reclaimed old industrial land and prepared

it for new businesses

Invest in transport links that may make

the area more attractive for

footloose industries

Other incentives governments can offer

include:- a grant for every job created, tax incentives

in the first year of business and free

premises for 12 months.

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Now this is exactly what happened in Sunderland in NE England

• This is what it used to be like:

• Coalfields• One of the largest

iron and steel works in the UK

• Shipbuilding • What factors made

this an attractive area for the 2 main secondary industries?

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The UK coal mines were shut in the 1970s

• Most were nearly worked out

• Some were too expensive to mine – there was cheaper coal to bought in Eastern Europe.

• Shipping was no longer important – there had been booms during both worldw ars, but ship building in Korea and Japan was much more up-to-date and cheaper. The last ships were built in the 1980s

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The UK coal mines were shut in the 1970s

• Most were nearly worked out• Some were too expensive to mine – there was

cheaper coal to bought in Eastern Europe.• Shipping was no longer important – there had been

booms during both world wars, but shipbuilding in Korea and Japan was much more up-to-date and cheaper. The last ships were built in the 1980s.

• The Jarrow marchers came from a shipyeard community that had 76% unemployment in the depression of the 1930s.

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Being one of the poorest areas in the UK ….

• …..the EU, the government and the local authorities did their best to bring employment.

• They used many of the methods to entice investors:

• The financial assistance is in the form of:– job creation grants– rates or rent free periods– assistance with preparation of the site

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In addition …• These industries are attracted by the

availability of a large, skilled labour force.• The attractions of the infrastructure include:

– two international airports– six major ports with a full range of facilities– improved road and rail links to London and

Europe– reservoirs in the Pennines providing constant

water supply– available industrial sites, both brown and

greenfield

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Factors Attracting New Industries

Why is Nissan sited in NE England?

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Map of NE EnglandMap of NE England

NE England

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Recent Industrial ChangesRecent Industrial Changes• Recently new employment has been provided by overseas

companies, as shown on the map below.

• New employment in North East England

These developments have further diversified the types of manufacturing industry (motor, electronics, off-shore supplies), and have provided more opportunity for office and retail work. The region has been particularly successful in attracting call centres, which employ more than 30,000 people.

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Reasons for Growth Reasons for Growth (Physical and Human)(Physical and Human)

• Availability of GreenfieldGreenfield sites

• Availability of BrownfieldBrownfield sites (previously used industrial area)

• These sites provide room for expansion.

• Deepwater Ports are available for the IMPORT of raw materials and for the EXPORT of finished products- in particular to EU countries.

• Good road infrastructure A1 (motorway) access from North/South UK

• Airports for both business travel and movement of products - close proximity to Newcastle and Stockton on Tees Airports

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Part 2 - Reasons for GrowthPart 2 - Reasons for Growth

• Large supply of skilled labour available from Newcastle, Stockton on Tees and Middlesborough after the decline of traditional engineering industries.

• Training opportunities available - local colleges and universities

• Relatively low ways in comparison to other European developed nations

• Few working constrictions in UK.

• Being an assisted government area, local and national incentives and grants were available.

• English language a benefit in EU/world market place

• Multiplier effect for new supplier/component companies

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Identifying Industrial Site and Location Factors Identifying Industrial Site and Location Factors from a map from a map

Additional land is available for expansion.

This is the Nissan plant, attracted to the NE by government grants and a strong tradition of engineering in the region.

The A 19 offers a major north-south transport route for the shipping in of components needed to build the cars and the export of the finished product to a European market.

The site is close to the major cities of Newcastle an Sunderland, a handy and skilled workforce.

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Identifying Industrial Location and Site Factors Identifying Industrial Location and Site Factors from aerial photosfrom aerial photos

The Nissan plant occupies a site of over 2miles2

The room for expansion is clear here

A test track – fancy a drive?

This major transport axis is good for workers and the movement of finished products and components.

The river Wear offers another transport option

The Nissan site was built on a brownfield, close to farming areas

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LocationLocation • NMUK is located in the Washington area of Sunderland, in a triangular area of land between the A19, the A1231 Sunderland Highway, and Washington Road.

• The factory is adjacent to the Nissan Distribution Centre (NDS), and a number of synchronous suppliers. The landscaped NMUK site incorporates conservation areas, such as ponds, lakes and woodland.

• The site, once the Sunderland Airfield, was close to large ports on the Tyne and Tees, within easy driving distance of the international Newcastle Airport, and close to major trunk roads such as the A1 and A19.

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How the government assisted..How the government assisted..

• In February 1984, Nissan and the British Government signed an agreement to build a car plant in the UK.

• As an incentive, the land was offered to Nissan at agricultural prices; around £1,800 per acre.

• The North East region of England had recently undergone a period of industrial decline, with the closure of most of the shipyards on the Tyne and Wear, and the closure of many coal mines on the once prosperous Durham coalfield. The high unemployment this caused meant Nissan had a large, eager, manufacturing-skilled workforce to drawn upon.

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Why did Nissan want to come to Washington?Why did Nissan want to come to Washington?

• NISSAN – A Japanese TNC• Wanted a foothold in Europe (access to European

market without paying import taxes).• Located in Washington (Sunderland) because:-

Large site for building (an old airfield) that was flat and had room for expansion.

The NE of England has a history of engineering skills from ship building that could easily be modified and staff trained to build cars the Nissan way.

Nearness of port (Tees) for import and export.

• Globalisation helps companies avoid trade restrictions. eg Nissan gained access to the EU market by locating in Sunderland.

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What were the benefits for the area?What were the benefits for the area?

• Look back at either map or photo and you see a housing estate nearby. This was built in response to Nissan moving in. The whole area was upgraded

• There is also the multiplier effect.

• Any idea what that might mean?

• This effect was enhanced by Just-in-time production methods – something else you might not have heard of?

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A bit of explaining – just in time!A bit of explaining – just in time!• One of the ways to cut costs is not to run a huge stock of parts. As we

have said, these are really car assembly plants, NOT car manufacturing plants, so these need literally thousands of different item to be supplied.

• With a just-in-time approach, components arrive just in time to be installed.

• In this way, the amount of cash tied up in stocks and in work-in progress is kept to a minimum, as is the amount of space devoted to costly warehousing rather than to revenue-generating production.

• At Nissan, every vehicle is monitored automatically throughout each stage of production. A transponder attached to the chassis leg contains all of a vehicle’s production data e.g. its required colour, specification and trim.

• This triggers sensors at various points along the production line thus updating the records. When, for example, the transponder sends a message to the production system at a supplying company to produce a roof in a particular colour and trim, this triggers an order to the relevant supplier and a roof lining of the required specification is produced. Further along the production line the roof lining arrives to meet the vehicle to which it belongs - just in time.

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What has this to do with the multiplier effect?What has this to do with the multiplier effect?

• If the supplier is required to make and deliver the right components in short order, then this would be difficult over a long distance.

• So for example, the roof lining contractor, Grupo Antolin, a Spanish company, with a manufacturing unit in Ramsgate in Kent was given the contract. It was not long before he was looking for a local site to operate from, so once the order was automatically generated, he could supply and deliver with ease.

• This was happened to a number of component producers, increasing further employment opportunities within the Sunderland area.

• This is the multiplier effect. Bring in money and jobs into an area and more jobs and money follow it.

• Not only that but with more people in good jobs, the need for service industries increase, which in their turn bring even more money and jobs.

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In the early days of inward investmentIn the early days of inward investment

• Some companies arrived, took the grants and the freebies and after a few years moved on to somewhere offering them a better deal – like Siemens and Fujitsu who have now both closed.

• But Nissan has expanded and is using Sunderland as a base for research and development.

• It has not always been plain sailing however.

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Recent news!Recent news!

• On the 8th January 2009, Nissan announced it was to shed 1200 jobs from the factory due to the automotive industry crisis of 2008. As the 3rd night shift was removed, returning the factory to 2 shifts a day.

• However, later that year, 150 workers were taken back on, due to increased production resulting from the scrappage schemes implemented across Europe as a result of the recession.

• These schemes paid people a fee for scrapping older, high polluting cars in favour of buying new ones.

• It turned out to be a welcome boost to the industry

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Recent developmentsRecent developments

• Tuesday, 21 July 2009

• Nissan has announced plans to build a plant for the production of its advanced lithium-ion batteries in Europe, the first significant step towards producing batteries for its Zero Emission Mobility Program in Europe.

• As part of the newly established Low Carbon Economic Area, Government intends to establish a new training centre, specialising in low carbon automotive technologies; a technology park and an open access test track for low carbon vehicles.

• Research takes places at the Centre for Advanced Electrical Drives at Newcastle University and Sunderland University’s Institute for Automotive and Manufacturing Advanced Practise (AMAP) provides design consultancy and state-of-the-art training for both new entrants and experienced engineers.

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Recent developmentsRecent developments• Friday, 18 December 2009 • Regional Development Agency One North East and car

manufacturer Nissan Motor Co., today entered the next phase of their partnership on the development of zero emission mobility in North East England.

• Under the agreement, One North East will install at least 619 publicly available, ‘future-proof’ charging points by January 1, 2011, which will support both 3kW and 7kW charges and twelve 50kW ‘rapid-charging’ stations. Electricity at the 619 charging points will be provided free of charge until March 31, 2012.

• Nissan has agreed to supply Nissan LEAF electric vehicles to the region in early 2011 and to place priority on requests for electric vehicles in the UK from North East England.

• Nissan LEAF is the world’s first affordable electric vehicle. Designed specifically for a lithium-ion battery-powered chassis, the medium-size hatchback comfortably seats five adults and has a range of more than 160km (100 miles) to satisfy real-world consumer requirements.

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Nissan Leaf – Nissan Leaf – first all-electric car by designfirst all-electric car by design