APP0068

 


Written evidence submitted by Nissan Motor Manufacturing UK

 

Introduction

  1. Nissan employs 8,000 people in the UK, across its manufacturing, engineering and design facilities. We support a further 32,000 indirectly though dealerships and our supply chain.

 

  1. One in three cars built in the UK is a Nissan. More than £3.5bn has been invested in Nissan's world-renowned Sunderland Plant, which started production in 1986 and now exports 80% of production to more than 130 markets. Our other UK operations include Nissan's European Design Centre in Paddington, London, Nissan's Technical Centre in Cranfield, Bedfordshire, and Nissan's UK Sales and Marketing headquarters in Rickmansworth, Hertfordshire.

 

  1. We have a rich heritage in the UK with 30 years of manufacturing and engineering presence, and remain committed to building and engineering cars in the country. In 2015, we produced more than 475,000 vehicles in the UK. The Nissan Sunderland plant is the most productive in Europe, and we pride ourselves as an employer on our training and development programmes, creating a new generation of engineers, through our apprenticeships programme.

 

  1. Our apprenticeship scheme, based at the factory in Sunderland, is widely recognised as one of the best in the industry. Nissan currently has 187 apprentices on its books covering all areas of the business from the shop floor to the offices, while four of Nissan's senior management team, including managing director Kevin Fitzpatrick started their careers through apprenticeships. These schemes last five years, and we train young people not only in engineering, but in every aspect of the business. Our apprenticeship technicians spend the first year of the scheme at the neighbouring Gateshead College, spending increasing amounts of time at the plant over the following four years. Our apprentices receive a number of nationally recognised qualifications.

 

  1. Apprenticeships have been critical to Nissan's success in the UK, and a vital way of growing the business. We believe that all employers should be willing to take on apprentices, as part of a wider contribution to the skills landscape in the UK. However, we remain concerned that the Apprenticeships Levy will hit those businesses that already invest in training while failing to address the skills shortages that the UK is facing. We are continuing to work constructively with the Department of Business, Innovations and Skills on how skills policy at macro level can be transformed to ensure the UK’s place as a world leader in workplace productivity.

 

 

The importance of apprenticeships and what Nissan is already doing

  1. We believe that the Government is right to try to close the gap between academic and vocational education through the promotion of apprenticeships. For too long, vocational training has been underfunded, undervalued and underutilised.

 

  1. Nissan has, for its part, prioritised the development of apprentices as a means of growing our business in the UK, training a new generation of Nissan workers with the skills that we need for our advanced automotive projects. There have been more than 1,400 apprenticeships at NMUK since the plant was launched, and we are pleased that the Government is seeking to work with employers to make sure that training reflects the needs of employers.

 

  1. Nissan welcomes the progress made in the last parliament on new apprenticeships standards that sought to rectify the issue of quality, and in turn address the ‘image problem’ that apprenticeships face. This is particularly relevant in engineering. The image of engineering in the UK compares very unfavourably with the value placed on the profession in countries like Germany, and this is reflected in the numbers of engineering graduates each country produces. Germany produces around 40,000 engineering graduates per year compared with around 23,000 for the UK. Companies like Nissan investing in engineering and manufacturing will make it easier to rebalance the economy in a way that helps the Government meet its objective of building a strong export led economy. The Government should and can do more to promote careers in engineering as a high-value career path, and ensuring that apprenticeship training is structured and of a high quality is the first step in a radical overhaul of how the UK develops a strong engineering and manufacturing base.

 

  1. We believe that excellence in skills development is achieved through knowledge sharing; looking at examples of what is working well internationally, and innovation in how to achieve these conditions in the UK.  As part of a broader rethink of skills policy, Government should prioritise making it easier for skills and knowledge to be exchanged around the world. It is often the case that high potential employees from overseas are placed in NMUK for career development. These individuals, who offer specialist skills for projects which are simply not available in the UK, often rise to significant and influential positions in the company with resulting indirect benefits to the plant. Planned changes to Tier 2 Migrant Visas, although promoted as an attempt to prioritise the training of young British workers over migrant workers, could in fact make it harder for us to train people at NMUK.

 

  1. Equally, at Nissan we would like to be able to up-skill many more of our British engineers in evolving technologies such as Digital Development, however, in doing so staff need to be trained and work close to where R&D takes place. For Nissan this is our global headquarters in Japan. For the business in the UK, this is a significant investment both in terms of the time the engineer spends out of the UK and also in the large amount of red tape currently involved. Nevertheless when skills return to the UK, the potential benefit is huge because employees bring with them cutting edge technological knowledge and expertise that enables new projects to be set up within the UK. We undertake this work because we think not only is it the right thing to do, but that the business case can be made, and productivity gains realised. Should business have additional expenditure imposed upon them, these ‘added value’ interventions will not be justifiable.

 

The Apprenticeship Levy

  1. Addressing the historic injustice between academic and vocational education is long overdue. There is much in the Government’s plans to be welcome, however, we it is vital that the Government gets the levy right so that it does not hit businesses that already invest in apprenticeships.

 

  1. The total Nissan UK payroll costs are £331m per annum. We estimate that the levy would be at least £1.5m per annum for Nissan, if applied at 0.3% of the overall wage bill. However, existing SFA funding rates cover a proportion of the overall non-wage costs of apprenticeships and if the funding rates do not change to better reflect the true costs of training an apprentice Nissan would not be able to sustain its current apprenticeship program.  As our training budgets are fixed, any additional costs would lead to a reduction in apprenticeship numbers.

 

  1. There are solutions to this problem, which we would happy to submit further evidence on. If the Government opted to link cost recovery to the level of qualification, and therefore the quality of training, rather than simply a proportion of external training fees, business would have an incentive to invest in higher level skills. We recommend the following minimum levels for the recovery of fees: £4000 for Level 2, £8000 for Level 3, and £16,000 Level 4)

 

  1. There is a further concern that should Nissan contribute £1.5m per annum to HMG, then a proportion of this funding will be sent to the devolved administrations under the Barnett formula. Skills policy is a devolved issue, and so the Scottish and Welsh governments have a separate approach to encourage the numbers of apprentices. At present, we have not heard enough from Government as to the safeguards it would implement to ensure that 100% of funds raised from the levy were reserved for the apprenticeships fund.

 

  1. Companies like Nissan who have historically seen apprentices thrive have done so because there was a clear business need to train a younger generation in new, innovative skills, to create the exciting technologies of the future. Thus, the number of employees is not a useful measure of determining a companies’ requirement for apprentices. Apprenticeship provision needs to be considered and thoughtful, and have a rational place within a companies’ employee structure.

 

  1. Apprenticeships are a small part of the puzzle of the UK’s wider industrial strategy, and the Government should seek to undertake a sector by sector analysis of how to encourage industry to thrive. However, within this, the Government could look more forensically at the power of supply chains, and how best to encourage joined up thinking within competitive sectors. We believe that the apprenticeship levy should have the potential to be used to train apprentices that are not the direct employees of an organisation, but form part of the wider supply chain.

 

  1. For example, the North East has a thriving automotive sector, and Nissan’s presence in the UK over the past 30 years has resulted in investment across the region. Nissan would like to take the opportunity to deliver apprenticeships across the region to develop the region’s automotive specialism. A particularly acute issue in advanced manufacturing, which relies heavily on wide supply chains, is that companies at the head of the supply chain can be let down by the comparative weakness of investment in skills training across the supply chain. However, this should remain an option, not a statutory requirement. 

 

Conclusion

  1. The key to solving the apprenticeships puzzle is not solely about quantity. While the efforts to drive up apprenticeship numbers are commendable, apprenticeships are but one part of a wider skills problem that the UK is facing. Should the Government accept the premise that business is best placed to determine the shape of apprenticeship provision, we ardently believe that the Government should also accept that imposing the apprenticeships levy on business will do nothing to address issues of quality.

 

  1. Nissan is a global company, with extensive first-hand experience of how skills training and development in the automotive sector is promoted in other countries. A comparison with the leading automotive R&D hubs shows that a long-term strategy with a clear commitment to investment in R&D is crucial to success, sending a signal to investors that they can expect results, encouraging more inward investment. We cannot see apprenticeships, and ambitions to improve the quantity of apprenticeships, in isolation to the UK’s wider productivity and industrial policy or we run the risk of pursuing quantity over quality.

 

  1. Government must be prepared to empower business, who in turn have a responsibility to invest in the skills and the workforce for the future. Apprenticeships are a vital part of the skills puzzle, and while we remain concerned with the implementation of the Government’s levy, we will continue to work with Government on how best to train our young people.

 

March 2016