When you’re crushing it like Nissan has been, a new production plant is a good problem to have

Nissan has been on such a roll in the U.S. that if it keeps it up, it may be forced to build a new production facility in the country. It’s a tremendous problem to have, one that could be born out of necessity as the automaker’s current facilities in Tennessee and Mississippi are maxed to capacity. Given the situation, the Japanese automaker may have no choice but to take the dive on building a new plant if it wants to meet its long-term goal of helping the mothership, Renault-Nissan, achieve its own goal of selling 14 million vehicles per year by the end of 2022.

When you’re a company like Nissan, and you’re faced with this dilemma, what do you do? It’s an issue that just about every automaker in the world would want to have. Don’t think for one second too that Nissan is sweating it because the returns have been that good for the Japanese automaker.

But the reality is Nissan’s two facilities in the U.S. don’t have the capacity to bring in new production volume at the rate the company is growing. That includes Nissan’s plant in Smyrna, Tennessee, regarded as the most productive auto production facility in the U.S. The Tennessee plant is where Nissan builds the Rogue SUV, now the most popular vehicle in the U.S. after usurping the Toyota Camry in that position.

The Trump factor

Donald Trump Giggles Inside as Nissan Considers New U.S. Production Facility
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Toyota and Mazda have already announced plans to build a $1.6 billion joint facility at a yet-to-be-determined U.S. site, a move that drew praise from the president, who referred to the plan as “big stuff.”

It’s hard to tell what’s important and what’s not with the current U.S. administration, but it doesn’t hurt Nissan if it decides to build a new production plant. Certainly, U.S. president Donald Trump would welcome the development. The man has prodded Japanese automakers to build their cars in the US. He even raised the issue during a state visit to Japan, encouraging the car manufacturers to “try building your cars in the United States instead of shipping them over.”

Regardless if he knows that a lot of these same companies already have manufacturing facilities in the U.S., a lot of them, including Nissan, still import several models from Japan. Toyota and Mazda have already announced plans to build a $1.6 billion joint facility at a yet-to-be-determined U.S. site, a move that drew praise from the president, who referred to the plan as “big stuff.”

If Nissan goes a similar route, it could get the same pat in the back from the president, for what that’s worth.

Nissan execs are warm to the idea of a new production plant

Donald Trump Giggles Inside as Nissan Considers New U.S. Production Facility
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Most of the company’s execs seem to think that a new plant is the right course of action.

Ultimately, the decision to build a new production facility rests with the people who run Nissan. To that end, most of the company’s execs seem to think that a new plant is the right course of action.

Nissan North America chairman Jose Munoz said that “at some point, we may need it,” referring to a new production facility.

Even Carlos Ghosn, the chairman of the Renault-Nissan Alliance and the final decision-maker, understands the necessity of a new plant in the U.S. if the conglomerate wants to meet its 2022 goal. “Local manufacturing depends on what size you’re aiming for,” Ghosn told Automotive News when asked about plans for Mitsubishi in the U.S.

“It’s possible to be a niche player in a large market without local manufacturing if you intend to be a full-fledged manufacturer, you need to decide to localize. For 100,000 cars a year in the United States, you don’t need to localize. If you say my goal is to sell 500,000 cars in the United States, local manufacturing is a must.”

He may be referring to Mitsubishi, but as far as sales volume goes, he may as well be talking about Nissan too.

References

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Source: Automotive News

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