Nissan face battery plant cuts in Sunderland and Tennessee following procurement review
Nissan CEO Carlos Ghosn is rumoured to be preparing to cut battery manufacturing, in a new reversal on electric cars that has re-opened deep divisions with alliance partner Renault.
The plan, which faces stiff resistance within the Japanese carmaker, would see U.S. and British production phased out and a reduced output of next-generation batteries concentrated at its domestic plant, two alliance sources said.
In what may also prove a politically sensitive blow to Japan Inc., Nissan would follow Renault by taking cheaper batteries from South Korea's LG Chem for some future vehicles, including models made in China.
"We set out to be a leader in battery manufacturing but it turned out to be less competitive than we'd wanted," said one executive on condition of anonymity. "We're still between six months and a year behind LG in price-performance terms."
A decision is due next month on the Nissan battery plants in Sunderland, England, and Smyrna, Tennessee, the sources said, following a tense procurement review with 43.4 percent shareholder Renault, the smaller but senior partner in their 15-year-old alliance.
"Renault would clearly prefer to go further down the LG sourcing route, and the Nissan engineers would obviously prefer to stay in-house," another insider said. "The write-off costs are potentially huge."
Responding to the Reuters report, Ghosn said that Nissan may open battery procurement to LG and other suppliers, adding that no decision had yet been made.
Alliance spokeswoman Rachel Konrad said Renault-Nissan was "100-percent committed to its industry-leading electric vehicle programme" and had no plans to write down battery investments.
Nissan is already negotiating with manufacturing partner NEC Corporation on the shift to dual sourcing, with Ghosn's backing, the sources said. Nissan currently makes all its own electric car batteries.
One option being explored would see LG, which supplies some Renault models, invest in its own battery production at one of the overseas Nissan plants as the carmaker halts operations at the sites.
The alliance is also in talks with LG on a deal to supply batteries for future Renault and Nissan electric models in China, one of the sources added.
For more information, please visit: http://uk.reuters.com/article/2014/09/15/uk-renault-sa-nissan-batteries-idUKKBN0HA0CC20140915
Will Public Procurement Budgets Increase in 2021?
Procurement is more than just a private enterprise. COVID-19 reminded us that sourcing materials is an essential part of the government’s role. Throughout 2022, tiny departments sourced massive amounts of personal protective equipment (PPE), medical supplies, and emergency vaccines and testing kits. Even non-procurement professionals were pulled into the fray, as frantic timelines demanded nothing less.
According to Celeste Frye, co-founder and CEO of Public Works Partners, the crisis brought procurement to the attention of skilled employees who had never considered it. As non-procurement personnel stepped up to help their coworkers, many found that they’d stumbled upon a critical and rewarding job. “Existing public employees have seen the essential nature of the work”, Frye said. “[They’ve] gained some critical skills and possibly [grown] interested in pursuing procurement as a longer-term career”.
Small, Local Suppliers Take Charge
Frye, whose firm helps organisations engage stakeholders and develop long-term procurement strategies, thinks it well worth the effort to open one’s mind to new opportunities. Cooperative contracts, for instance, can help public departments and municipalities save money, time, and effort. By joining together with other towns or cities in the region, public procurement teams aggregate their purchasing power and can drive better deals.
These cooperative contracts have the added benefit of advancing equity. Smaller suppliers that struggle to compete with established firms for government contracts can act as subcontractors, helping big suppliers fulfil bits of the project. Once they get their foot in the door, small, local, and disadvantaged suppliers can then leverage that government relationship to take on additional projects.
Especially as governments start to pay attention to procurement resilience, public procurement departments must expand their requests for proposals (RFPs) to take into account innovative solutions and diverse suppliers. According to Frye, Public Works Partners—a certified female-owned firm—has benefitted from local and state requirements that specify diversity.
Post-Pandemic Funding Swells Procurement Budgets
And the pandemic won’t be the end of it. City governments need to build sustainable energy infrastructure such as solar panels, charging stations, and recycling plants, ensure that masks and medicines are never in short supply, and source new technologies to keep up with cloud and cybersecurity concerns.
Public procurement budgets will likely increase to match demand. As Peter Ware, Partner and Head of Government at Browne Jacobson, explained, “in a non-pandemic world, the [U.K.] government spends on average around £290 billion on outsourced services, goods, and works...anywhere between 10% and 14% of Gross Domestic Product (GDP). Post-pandemic, city procurement will only increase as national governments provide local divisions with emergency funding.
And in truth, government employees might jump at the opportunity. Frye noted that public procurement could give immediate feedback on new programmes: “[Procurement] is where new laws and policies ‘hit the road’ and are implemented”, she said. “Professionals in these fields get the satisfaction of creating real change and seeing quantifiable outcomes of their work”.