Nissan sheds 1,200 jobs as slump hits UK's biggest car factory

Days after UK car sales in 2008 were revealed to have dropped 11.3 per cent on the previous year, Nissan announced that almost a quarter of the 4,900 workers at its factory in north-east England would lose their jobs.

The job losses include 400 workers on temporary contracts. There are fears that a further 1,000 jobs in the region are now at risk.

The factory, which opened in 1986, is the biggest car plant in the UK.

Nissan said it was forced to slash jobs after other cost- cutting measures failed to solve the problem. Staff had been on an extended Christmas break.

The losses came despite an annual increase in production of 30,000 vehicles. Nissan had seen sales decline by less than the industry average over the year – though the drop in December was sharper than that suffered by its rivals.

Trevor Mann, the senior vice-president (manufacturing) for Nissan Europe, said the company was due to start production of a new model in 2010 but needed to "right-size" its operations in the interim.

He said: "This is an extremely regrettable and unfortunate decision, but ultimately it was one we had to make."

Derek Simpson, the joint general secretary of the Unite union, said: "This is devastating news for the workers and their families. Today's announcement shows just how serious Britain's economic difficulties are."

The motor industry has been pleading for government action to boost the availability of credit for consumers to help them buy new cars.

Nissan sold 66,336 new cars in the UK in 2008 – only a fraction down on 2007. However, sales last month fell 26 per cent compared with the same month in 2007. This compared with a national decline of 21 per cent.

Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders, said: "While the announcements are desperately sad for those involved, it confirms the fears the industry has expressed over the last couple of months."

Unite is pressing for a 13 billion strategic support package for manufacturing from the government, similar to support provided by the German, French and Swedish governments to their manufacturing sectors.

Lord Mandelson, the Business Secretary, said he would visit the plant as soon as possible and open discussions about bringing production of Nissan's range of electric cars to Sunderland.

He said: "I appreciate that this will be a tough time for workers. This is a highly skilled workforce that has many of the skills that UK and worldwide industry will need as conditions improve."

But the Tories said the announcement was an embarrassment to Gordon Brown, the Prime Minister, who days earlier had hailed Nissan's use of shorter working hours as a way of avoiding redundancies.

Alan Duncan, the shadow business secretary, said: "He has previously said his plan would help companies like Nissan to save jobs. That now appears to be little more than cynical spin."

Meanwhile, job losses were also announced by the high street music chain Zavvi, and in Ireland by the computer manufacturer Dell.

A total of 178 staff at Zavvi, which was already known to be in trouble, lost their jobs after the firm's administrator closed 22 stores to cut costs. The remaining 92 Zavvi stores – which used to trade as Virgin Megastores – will stay open as efforts to sell the business continue.

Zavvi fell into administration on Christmas Eve after it was crippled by the collapse of Woolworths' Entertainment UK wholesaling division.

EUK was the company's main supplier and its demise left Zavvi unable to take customer orders.

Computer giant Dell is to axe 1,900 jobs with the closure of its flagship manufacturing plant in Limerick. Production will transfer to a new facility in Poland, which will be cheaper to run.

Dell said the move was part of a $3 billion global cost-cutting drive announced last year.

Business leaders in Limerick said the knock-on effect would cripple the local economy, with up to 6,000 other jobs at risk.