Nissan SA to cut 400 jobs

Nissan South Africa plans to retrench 25% of its employees – about 400 of its total 1 600 workforce – as part of an employee reduction plan because of its inability to secure a replacement model for its NP200 bakkie for production at its Rosslyn plant in Pretoria.

Production of the Nissan NP200 bakkie is scheduled to end in March 2024 at the end of the model’s extended lifecycle.

Nissan SA to end production of NP200 bakkie

Nissan SA announced on Friday that its Rosslyn plant continues to build its flagship Navara pickup, with model upgrades to come and export destinations set to increase, but is preparing to end production of the iconic NP200.

It said the immediate replacement model for the NP200 was planned to be built on an alliance-shared platform in Russia, but the geopolitical situation in Russia meant this model was no longer viable due to significantly reduced volumes.

The alliance is a reference to the Renault-Nissan-Mitsubishi Alliance, while the geopolitical situation in Russia appears to be a reference to Russia’s 2022 invasion of Ukraine and the subsequent war between the two countries, which has resulted in a large number of countries imposing sanctions on Russia.

Nissan SA added on Friday: “In line with our African strategy, securing a second model for production in South Africa is a priority, and a study into an alternative vehicle is already progressing.

“Until our future plans are confirmed, the business will be operating at reduced production volumes and needs to act responsibly to maintain its long-term competitiveness and be ready to secure future opportunities.”

ALSO READ: Blame Russia: Invasion slammed brakes on Nissan NP200 successor

Consultation phase

Nissan SA confirmed it has now entered into a formal consultation phase to restructure the business.

It said this “could result in a reduction in the number of employees across the company”.

“During the consultation phase, we will work with our employees, their representatives, and our partners to minimise the impact on our people and investigate other opportunities for them and for the business to ensure a sustainable future for the brand in South Africa,” it said.

Nissan SA spokesperson Mamokhele Sebatane confirmed to Moneyweb that the company employs about 1 600 individuals and expects about 400 staff to be affected by the employee reduction plan.

However, Sebatane stressed that “we cannot and should not preempt the result of the consultation process”.

“Our focus at this time will be on minimising the impact on employees while taking responsible action needed to safeguard the long-term sustainability of the business,” she said.

Sebatane was guarded in her comments on when it is anticipated that affected employees will leave the employ of Nissan SA.

“We cannot and should not preempt the result of the consultation process for affected employees,” she said.

“Between the conclusion of consultation proceedings and the end of production, Nissan will implement a phased approach for those leaving the employ of the company. Our focus at this time will be on minimising the impact on employees,” said Sebatane.

Comment about the planned retrenchment was requested from the National Union of Metalworkers of South Africa (Numsa), but a response has not yet been received.

ALSO READ: End has arrived: Nissan NP200 no more by March 2024

Production figures

Sebatane confirmed that Nissan SA expects the Rosslyn plant to produce 14 083 NP200 units in its 2023 financial year but did not provide any production figures for the Navara.

“From a broader sense of production, Nissan is on track to meet the forecasted production volumes at the plant in 2023 – as we continue to leverage our operations in Rosslyn as an LCV [light commercial vehicle] hub and gateway into Africa in relation to Nissan’s Africa Mid-Term Plan,” she said.

Sebatane did not provide any details of projected production volumes by the Rosslyn plant in 2024, merely stating: “We are confident that Nissan will continue adding value to the South African economy in 2024.”

Nissan SA navigating through APDP2

Comment was requested from Nissan SA on the impact of its lower planned production in 2024 on the incentives available to original equipment manufacturers (OEMs) in terms of the Automotive Production and Development Programme phase 2 (APDP2) – particularly the production volume thresholds applicable to APDP2 incentives.

In terms of the APDP2, a minimum annual volume of 50 000 units is required for OEMs to claim the Automotive Investment Scheme (AIS).

Sebatane said Nissan SA is engaging and realigning with all key stakeholders to navigate through this period, with its focus at this time on minimising the impact on employees until a viable replacement model is confirmed.

However, she stressed that the viability of Nissan SA’s plant is not under threat if a second model is not secured for the plant.

“An NP200 replacement was discontinued only due to the geopolitical situation in Russia, rendering the project unviable.

“It does not reflect the competitiveness of Nissan SA as a plant,” she said.

“We are already producing the Navara, Nissan’s flagship pickup. Not only is this a great product, it is a core model for the success of the Africa Mid-Term Plan.

“We are also seeing new markets open up in Libya, Algeria and Egypt, as well as continuing demand from the domestic South African market.

“The action we are taking now is to ensure the long-term sustainability of Nissan in South Africa.”

‘Not necessarily bad news’

Mikel Mabasa, CEO of automotive business council Naamsa, said on Sunday he was reluctant to comment specifically on Nissan SA’s announcement because the company has not communicated directly with Naamsa about these plans.

However, Mabasa said every OEM has an agreement with the government in relation to production targets and the implementation of the APDP2.

“I suppose the Nissan SA team will have to discuss whatever new plans they have with the Department of Trade, Industry and Competition so they can agree on what these plans will look like going forward,” he said.

Mabasa added that the announcement by Nissan SA is not necessarily bad news for South Africa, even for those employees affected by the job cuts, because of the plan by Stellantis to establish a new manufacturing plant in Coega in the Eastern Cape, two other OEMs considering establishing a manufacturing presence in South Africa, and increases in production by other existing vehicle manufacturers in South Africa.

“I’m sure affected employees will be absorbed elsewhere within the ecosystem in some shape and form because there are obviously new manufacturers that are seeking to come to South Africa.

“I’m sure that many of them, when they do come in, will be looking to appoint people who are already experienced and have the necessary skills because the production of vehicles requires very specialised skills,” he said.

This article is republished from Moneyweb under a Creative Commons licence. Read the original article.