World-beaters

Tony Blair hailed staff at the company's award-winning Sunderland plant for beating off competition from France to build the next generation Micra.

Business experts last night predicted that the deal could be worth £500m to the North-East's economy.

In an article written exclusively for The Northern Echo, Mr Blair said the decision was largely thanks to the "talent, dedication and continued commitment to improving performance" of the Nissan workforce.

"I am delighted to have the chance to send my congratulations," said Mr Blair. "It was a real team effort, with everyone pulling together. It's shown this region at its best."

He added: "What Nissan's decision has confirmed is that the North-East and its people, given the chance to compete, can take on the world and win."

Nissan's decision - which had been in doubt until the very last minute - came as a huge boost to a beleaguered British motor industry, still reeling from Vauxhall's decision to cease car production at its Luton plant.

North-East workers had to overcome a 30 per cent cost differential with the Renault plant in Flins, just outside Paris, caused by the strength of the pound against the euro. Renault owns a 36 per cent stake in Nissan.

Their reward for bridging the gap was confirmation of a £230m investment that will boost production at the plant to half-a-million cars per year, making Sunderland the biggest motor manufacturer in the country.

The deal also safeguards thousands of jobs for at least ten years and confirms the North-East's position as the most efficient place to make cars anywhere in the world.

The first new Micra will roll off the production line in just over 23 months.

UK managing director John Cushnaghan said: "There's a lot to do but I have absolute confidence in the people of Nissan UK to deliver every single commitment that has been made."

The investment will be used for an advanced flexible working system that will enable the plant to produce 500,000 cars a year by 2003. The factory currently produces just over 235,000.

As a result of that investment, and the new working practices, employment will rise by around 500 to 5,000. But Mr Cushnaghan said that would be the maximum number of jobs at the plant.

He said: "We simply haven't got the capacity to rise further than that."

Mr Cushnaghan revealed that the decision process had kept him and staff on tenterhooks until early yesterday, when Nissan President Carlos Ghosn met Prime Minister Tony Blair.

He said: "An executive board meeting in Japan gave a mandate to Mr Ghosn to make the decision, and until this morning only he knew what that decision was."

Mr Cushnaghan also urged component suppliers to meet the challenge of the euro. The group's future lay with the single European currency, he said.

Currently only 20 per cent of components are sourced in Europe, but the firm plans to source around 65 per cent of parts on the continent, paid for with the euro.

Mr Cushnaghan said: "Just because we are sourcing our parts in the euro shouldn't rule out our British component suppliers."

Trade and Industry Secretary Stephen Byers said: "Won against international competition, this decision demonstrates in the clearest possible way that Britain is good for business."

Tory leader William Hague demanded to know if Nissan had received any assurances about joining the euro from the Government.

He swept aside talk that his anti-euro policy could harm jobs, saying: "I don't believe that, in general, investment in this country would be damaged by being clear about keeping the pound."

Labour MP Fraser Kemp, whose Houghton and Washington East constituency includes the Nissan plant, last night attacked Tory MP John Redwood for claiming last year that the Sunderland factory had lost the new contract.

"John Redwood should apologise to all at Nissan for the unfounded fears he stoked up among its workers and their families," he said.