The Nissan Oppama factory, established in 1961, was a key symbol of Japan’s growth as an industrial powerhouse after World War II.
Today, it represents the dangers of being unexpectedly affected in a swiftly evolving sector.
The plant, situated approximately 50 kilometers south of Tokyo, will remain shut down until March 2028 as part of Nissan’s significant restructuring efforts following a sales decline that led to its most severe financial crisis since Renault rescued the struggling manufacturer from bankruptcy twenty-five years ago.
Japanese traditional brands are finding it challenging to adjust to evolving consumer preferences as newer companies such as Tesla and Chinese automakers like BYD gain prominence in the market. The situation at Oppama will act as a warning to Japanese manufacturers, highlighting the need for adaptation and innovation in the face of growing competition.
The Japanese economy is entering a new period characterized by a surge in bankruptcies among small and medium-sized businesses, which questions the traditional concept of lifelong employment known as shushin koyō.
Nissan has strong connections with Oppama, a factory city, where almost 10% of the population works directly for the company. School trips to the factory are common, and Nissan recently resurrected its baseball team after 16 years, but they were defeated by Toshiba in the semi-finals.
Yuji Fujita, the owner of a family-founded grocery store, considers the closure to be the most unfavorable outcome. He remembers the closure of the Zama plant in 1995, which was the first factory closure in Japan after World War II, and is worried about what lies ahead.
It remains uncertain how many of the 2,400 Oppama employees will be relocated to the Nissan division in Kyushu, located a thousand kilometers away, and the timeline for this move is also unknown. The labor union is requesting assurances for job security.
There is uncertainty about the future plans for the 1.7 million m2 area, which is equivalent to half the size of Central Park. Speculations include transforming it into a resort, theme park, or utilizing it for defense purposes. Reports suggest that Nissan and Foxconn have explored various possibilities.
CEO Ivan Espinosa stated that he is not considering outsourcing production. The mayor of Yokosuka is advocating for the utilization of space to boost the area’s economy and generate employment opportunities.
The factory’s closure announcement was not a total surprise, as its production had significantly declined over the years. In 2007, it produced seven models, but now only manufactures two. The Leaf, introduced in 2010 as the first mass-market electric car, has faced tough competition from Tesla and Chinese automakers.
Nissan plans to decrease its yearly production from 3.5 million to 2.5 million vehicles, reduce the number of factories from 17 to 10, and eliminate 20,000 jobs. This restructuring is expected to result in an accounting loss of $1.1 billion in the current fiscal year.
Groups like Foxconn and KKR have shown interest in the challenges following unsuccessful discussions with Honda. Additionally, smaller suppliers are under pressure, with 32 having gone out of business in the past fiscal year – the highest number in ten years.
Analysts view the industry as undergoing a process of “natural selection,” where only companies with the necessary capital and technology will survive to compete in electric, autonomous, and efficient engines.
