Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Investing in Spanish Nissan factory cheaper than closing it: Spanish official

Published 05/25/2020, 06:01 AM
Updated 05/25/2020, 07:50 AM
© Reuters. FILE PHOTO: A Nissan logo is pictured at Brussels Motor Show

© Reuters. FILE PHOTO: A Nissan logo is pictured at Brussels Motor Show

By Isla Binnie

(Reuters) - Nissan Motor (T:7201) would find it cheaper to invest in its Barcelona factory than to close it, a senior Spanish industry ministry official said on Monday, pegging the estimated cost of a shutdown at more than 1 billion euros ($1.1 billion).

Europe has long been a difficult market for automakers due to overcapacity, stiff competition and tight regulations, and economic shutdowns to stem the spread of the coronavirus have piled on more pressure.

People with knowledge of the matter have told Reuters Nissan may be considering closing its factory in northeastern Spain, but has made no decision yet.

Spain's secretary for industry, Raul Blanco, said he had received no official confirmation of Nissan's plans for the plant, which along with related facilities in the area employs 3,000 people. The company is due to unveil a strategy update this week.

"It is much cheaper to invest than to leave," Blanco said, adding it would cost the company more than 1 billion euros to settle labour and contractual issues in closing what would be its last facility in Europe outside of Britain.

The factory needs around 300 million euros in what he said was overdue investment.

"The situation is very difficult and we have to be realistic," Blanco told reporters on a conference call. "Nissan has not invested in the plant for 10 years."

Referring to any potential closure, he said: "This is not a friendly situation."

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

"The plant's situation has worsened but it is fully competitive if it is put to work and the right investments are made for the next 10 years," Blanco said.

© Reuters. FILE PHOTO: A Nissan logo is pictured at Brussels Motor Show

Latest comments

They give the finger to Nissan. Close it = pay 1b. dont close, pay 300mil. Nissan cant sell cars because quality. Nissan is going down the rabbit hole.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.