Britain's car industry was thrown a lifeline yesterday when the prime minister offered Nissan substantial aid to build the new Micra at Sunderland rather than in France and union leaders called off an all-out strike planned for Peugeot's Ryton plant.
In talks with Carlos Ghosn, Nissan's president, at Downing Street, Tony Blair and Stephen Byers, the trade and industry secretary, mentioned an aid package worth £50m to offset the strength of sterling.
But Mr Ghosn, a former Renault executive, refused to give assurances that the new Micra would be built at Sunderland, Europe's most productive car plant. He warned about the impact on future investment of the strength of sterling against the euro.
Renault, which owns 36.9% of Nissan, is pressing for the Micra to be built in France, probably at its plant in Flins, near Paris, which already produces the Clio, a model that will share the Micra "platform". That could mean the loss of 1,000 of Sunderland's 5,000 jobs.
Nissan denies that Renault will decide the matter but Mr Ghosn confirmed yesterday the group is seeking £200m savings by buying components abroad and reducing British content by 20% to offset the pound's strength.
Mr Blair, according to his spokesman, said the government had delivered economic stability, the most important platform for business.
Confirming that the two sides had discussed aid towards the £250m investment needed at Sunderland to build the new Micra, the spokesman said Mr Blair spoke of "our strong belief that Sunderland is the right place for it".
Sir Ken Jackson, leader of the AEEU engineering union, which represents all workers at Sunderland, said: "Our priority is to get the new Micra into Sunderland. Anything the government can do to help get the new investment will be warmly welcome."
Vince Cable, the Liberal De mocrats trade spokesman, said that if Nissan was forced to quit Sunderland because of uncertainty over participation in the euro "that's a very powerful signal to the British government that it has got to make its mind up".
Peugeot, meanwhile, averted an all-out strike by 2,500 workers at its Ryton plant near Coventry by agreeing to suspend its plans to impose new working patterns for three weeks from August 21, the day the plant reopens after a three-week holiday closure and the date set for the strike.
The French car group, which lost £6.5m a day through two walk-outs, on Thursday and Sunday, had wanted to cut the working week from 39 to 36.75 hours but enforce shifts on a Friday night. The staff will return from their holidays under the old contracts while union leaders, who had endorsed the original scheme, and company officials negotiate a new agreements which both sides hope will reduce the working week.
