The Japan Times reports that Nissan Motor Co. has estimated the closure of its plants in Barcelona could cost up to around EUR1.5 billion (JPY179 billion), a union source said on June 1.
The cost of the closure is at the heart of a debate in Spain over the move, with the government saying it would be cheaper to keep the plants operating, the report says.
According to the report, the decision to leave Barcelona was announced by the Japanese carmaker last week as part of a turnaround plan, triggering protests by workers and a commitment by Madrid to do all it can to convince the company to stay.
The Japan Times relates that Barcelona-based La Vanguardia newspaper earlier on June 2 cited Nissan documents as saying the closures could cost EUR1.45 billion, mostly to make around 3,000 workers redundant.
The union source said that a few weeks ago Nissan had told workers that shutting the three Barcelona facilities could cost around EUR1.5 billion, the report relays.
On May 28, the day the shutdown was announced, a Nissan executive told workers the cost could be much lower, at EUR700-800 million, the source added.
However, the source, along with another senior union official, said the second estimate was probably unrealistic as that would barely cover redundancy payments to workers, some of whom have been employed for more than 20 years.
On top of that, Nissan would face other costs related to suppliers and dismantling factories, the first source said, adding: “EUR1.5 billion is more realistic. It’s not easy to dismantle a factory.”
The report adds that La Vanguardia said that among the costs Nissan had estimated were EUR600 million for firing workers, EUR310 million in fiscal costs and potentially repaying EUR100 million of public aid.
Nissan believes it would take close to seven years to recover in savings the cost of leaving Barcelona, the newspaper said.
About Nissan Motor
Nissan Motor Company Ltd, usually shortened to Nissan, is a Japanese multinational automobile manufacturer headquartered in Nishi-ku, Yokohama, Japan.
As reported in the Troubled Company Reporter-Asia Pacific on April 21, 2020, Egan-Jones Ratings Company, on April 6, 2020, downgraded the foreign currency and local currency senior unsecured ratings on debt issued by Nissan Motor Co., Ltd. to BB from BBB.