Nissan decided to stay in Sunderland despite Brexit uncertainty after the UK gave it assurances © Nissan
Nissan decided to stay in Sunderland despite Brexit uncertainty after the UK gave it assurances © Nissan

Scheme to boost Nissan supply chain faces legal challenge

posted by Su-San Sit
2 February 2018

A £500m project aimed at boosting the supply chain for Nissan’s Sunderland car plant is facing a judicial review following a challenge by a group of rival investors.

The International Advanced Manufacturing Park (IAMP) scheme is joint project between Sunderland City and South Tyneside councils, backed by £100m of UK government funding, to create a 370-acre site for component suppliers and related advanced manufacturers around the existing Nissan plant. 

Britain’s car plants are heavily dependent on overseas suppliers for their parts, with almost 60% of parts in UK-assembled vehicles imported, which leaves sites vulnerable to fluctuations in exchange rates and potential tariffs after Britain leaves the EU.

In 2016, the UK government persuaded Nissan to build new models at its Sunderland plant despite the uncertainty surrounding Brexit after it "gave assurances" that the carmaker would have a competitive trading environment at the end of the Brexit process.

At the time, Colin Lawther, Nissan's head of European manufacturing, said the decision to stay in Sunderland was based on a set of conditions and the firm would constantly examine its decision.

As SM reported last year, the Japanese carmaker called on the UK government to invest between £100m and £140m into the supply chain last year to avoid disruption as the UK leaves the EU.

In addition to £100m in public funds, the government said it has committed another £150m to spend on nearby main roads.

The two councils said that there are already nine suppliers that wish to establish themselves at the IAMP and be operational by the end of 2019.

However, a group of investors that own a portion of the land next door to Nissan’s Sunderland plant, where the councils plan to build, have launched a legal challenge against the scheme. 

The group, Town End Farm Partnership (TEFP), which is run by the owners of health and beauty product wholesalers Kans and Kandy, have owned the 130-acre site, known as Wear Point 55, for a decade.

The group said that after years of discussion with the council about the IAMP scheme they have only been offered about 1/20th of current land value by the councils. 

The group said instead of selling to the councils, they wanted to build a similar large manufacturing complex on the land it owns, after a major supplier in the automotive sector said it was interested in setting up there.

Peter Razaq, director of Kans and Kandy, said their £70m development could create 1,300 jobs.

“Our development will secure investment to support the future growth of arguably the region’s most important employer in Nissan,” he said. 

“This comes at a time when businesses across the countries are looking for reassurances that trade and manufacturing with the UK can continue post Brexit. Our plans put the North East at the very heart of the resurgence of the country’s manufacturing sector.”

However, their planning application was knocked back by Sunderland City Council (SCC) over concerns it would put at risk the larger IAMP scheme, which the council said will create 5,000 jobs in the region’s automotive industry. 

TEFP said the refusal has given them grounds to ask a judge whether IAMP should go ahead, since it is a similar concept to its own. The group has now modified and filed a second application bid for its project with SCC.

Responding to TEFP’s legal challenge, the two councils said they would be pressing ahead with their work on phase one of the IAMP after development partner Henry Boot Developments lodged a planning application. 

“Henry Boot Developments have submitted the application and Sunderland and South Tyneside councils have already acquired all of the land required to deliver IAMP One,” they said. 

“With a pledge of £42m from the government and support from the business community, IAMP is about attracting more than 5,000 jobs, more than £300m of private sector investment over the next 10 years and developing a world-class environment for high tech industries and advanced manufacturing. As indicated last month, there is already interest from companies who want to locate on this site. 

“The Wear Point 55 planning application was considered and refused by all planning committee on its merits and in accordance with national and local planning policies. All applicants have the right of appeal on planning decisions.”

A decision on Henry Boot Development's planning application is expected in May.

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