The government’s Nissan deal should not be the blueprint for other Brexit trade agreements

Robots making cars in Sunderland. Image: Getty.

 The future of British trade following the EU referendum has dominated political discourse in recent months, and will no doubt continue to do so as Brexit negotiations begin in earnest over the coming weeks. Oddly however, there has been little mention of the one trade deal that the government has already struck following the Brexit vote: its agreement with car manufacturer Nissan to keep its car plant open in Sunderland.

The importance of Nissan and its supply chain in Sunderland is hard to understate, with around 7,000 people employed directly in car-making in the city. As the new Centre for Cities report Cities Outlook 2017 shows, Sunderland is the highest exporter of all cities in Britain, selling over £40,000 of goods and services abroad for every job in the city in 2014 (second placed Worthing sold £30,000).

But take Nissan and its supply chain out of the equation, and Sunderland would have had the 12th lowest exports of all cities.

The political gain for the government in striking the deal is therefore obvious, as the impact of Nissan leaving Sunderland would be disastrous for the city’s economy. And if the government’s industrial strategy and Brexit white paper are anything to go by, we are likely to see other similar short-term deals in future, with both documents outlining the ambition to strike more sector-led deals.

This, however, would be a mistake – for as our research shows, the Sunderland-Nissan deal doesn’t offer a long term solution for either the national economy generally or Sunderland specifically.

In terms of the national economy, doing specific deals with individual companies or sectors will benefit only a small number of places in Britain. As Cities Outlook shows, exporting industries such as cars, chemicals or pharmaceuticals are located in only a handful of places across the country.

And while Sunderland is not alone in its dependence on a single industry – Derby's exports are dominated by Rolls Royce, and Coventry by Jaguar Land Rover – in most cities their exports depend on a broad number of sectors. For these places, trade deals with specific businesses or sectors will do little to support their exports.

Click to expand.

For Sunderland, while a specific deal is a no brainer in the short term, it does little to alter the city's longer term path. Nissan's success in Sunderland should be rightly celebrated, but it also highlights the city's over-reliance on one company.

Sunderland has struggled to attract in business investment in high-skilled work (it ranks 44 of 62 cities for its proportion of jobs in knowledge-intensive business services) and it has the lowest number of business starts of any UK city. Even Nissan does little of its high-value activities in the city – for example, while its Qashquai model is assembled in Sunderland, it was designed in Paddington and engineered in Cranfield.

Without this changing, Sunderland will once again be in the position of requiring the government to strike another short-term deal with Nissan in future, as it did in 1984 to tempt the Japanese company to Wearside in the first place, and which it has done on a number of times since over the last three decades.

So to compliment the agreement that government came to with Nissan at the end of last year, policies need to be put in place now to deal with the challenges that have limited its ability to attract in and grow jobs in higher-skilled activities.

In Sunderland's case this is twofold. The first is to deal with skills. The city performs poorly on a number of skills measures, which undermines attempts to attract in high-skilled jobs. To change this, national and local leaders need to focus in particular on improving GCSE attainment at school level and literacy and numeracy skills in the current workforce.

The second is to improve its city centre as a place to do business. In recent decades a number of local and national policies have subsidised the building of our of town employment space while ignoring the problems of the city centre. This is continuing even now – the local council has used the city-deal it struck with the government to create the International Advanced Manufacturing Park next door to Nissan's plant, on top of securing enterprise zone status for a neighbouring site.

But until very recently the problems faced by the city centre had been ignored. There has, thankfully, been some progress on this recently, but making the city centre a more attractive place to do business needs to be at the very centre of the city's attempts to improve the job opportunities available to those who live in and around it.

Improving exports generally will be critical in boosting growth in the national economy, an issue acknowledged in the government’s recent industrial strategy green paper. But in order to help every city across the UK grow their export base, ministers need to focus on trade deals covering all sectors – and should avoid the temptation to prioritise deals for high-profile industries that will only benefit a small number of places.

Paul Swinney is senior economist at the Centre for Cities.

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To see how a city embraces remote work, just look to Helsinki

A deeply rooted culture of trust is crucial to the success of remote work. (Sean Gallup/Getty Images)

When I speak to Anssi Salminen, an account manager who lives an hour outside Helsinki, he’s working from a wooden platform on the edge of a Finnish lake. With a blanket laid out and his laptop set up, the sun low in the sky, Anssi’s remote work arrangement seems blissful. 

“I spend around half of my time working somewhere else other than the office,” he says. “I can work from home, or on the go, and I also travel to the Netherlands once a month and work from there.

“The emphasis in my work has always been that it doesn’t matter when or where I work, as long as I get things done.”

For many people around the world, the shift to remote work was sudden, sparked by the coronavirus pandemic. Finland, however, is finding the transition much less significant. Before Covid-19, the Nordic nation already displayed impressive levels of remote working, with 14.1% of its workforce reporting usually working from home. Only the Netherlands has a comparable percentage of remote workers, while the UK lagged behind at 4.7%, and the US’s remote workforce lingered at around 3.6%

Anssi works for one of many Helsinki-based companies that offers its employees flexible policies around when and where they work. That arrangement is in part due to the Finnish capital’s thriving start-up scene. In spite of being a relatively small city by global standards it is home to over 500 technology start-ups. These companies are leading the way when it comes to keeping employees connected wherever they choose to work.

“Our company has a completely location-free working policy,” says Kasper Pöyry, the CEO of Helsinki-headquartered software company Gapps. “All meetings are made available for online participants and facilitated accordingly. Some employees have worked extensively from abroad on a working holiday, whilst others prefer the comfort and social aspects of the well-stocked office. Whatever works for our employees is what works for the company.”

Like Gapps, many Helsinki-based firms are deeply preoccupied with providing the necessary technology to attract talent in a vast and sparsely populated country. Finland has only 15 inhabitants per square kilometre, and companies understand that in order to compose teams of specialised expertise, they may have to seek talent outside of the city. Local governments take a similarly proactive stance toward technological access, and Helsinki offers free, unrestricted, high-speed Wi-Fi from city-wide hotspots, while the country as a whole boasts some of the best coverage in Europe. 

But encouraging remote work isn’t just about optimising the potential of Finland’s workforce – companies in Helsinki also recognise that flexibility has clear benefits for both staff and employees. 

“The idea of a good work-life balance is ingrained in Finnish culture,” says Johannes Anttila, a consultant at organisational think tank Demos Helsinki. “It goes back to our rich history of social dialogue between labour unions and employers, but also to an interest in delineating the rules of working life and pushing towards people being able to enjoy their private life. Helsinki has been named the best city in the world for work-life balance, and I think that this underlies a lot of the mentality around remote work.” 

For Peter Seenan, the extent to which Helsinki residents value their free time and prioritise a work-life balance prompted his move to the city ten years ago. He now works for Finnair, and points to Finland’s summer cottages as an example of how important taking time to switch off is for people in the country. These rural residences, where city residents regularly uproot to enjoy the Nordic countryside, are so embedded in Finnish life that the country boasts around 1.8 million of them for its 5.5 million residents

“Flexible and remote work are very important to me because it means that I don’t feel like I’m getting stuck in a routine that I can’t control easily,” he says. “When I’m working outside of the office I’ll go down to my local sauna and go ice swimming during the working day, typically at lunchtime or mid-morning, and I’ll feel rejuvenated afterwards… In winter time especially, flexibility is important because it makes it easier to go outside during daylight hours. It’s certainly beneficial for my physical and mental health, and as a result my productivity improves.”

The relaxed attitude to working location seems to pay off – Finland is regularly named the happiest country in the world, scoring highly on measures such as how often its residents exercise and how much leisure time they enjoy. With large swathes of unspoiled countryside and a national obsession with the outdoors, sustainability is at the forefront of its inhabitants’ minds, leading to high levels of support for measures to limit commuting. In January, Finland passed a new Working Hours Act, the goal of which was to help better coordinate employee’s work and leisure time. Central to this is cementing in law that employees can independently decide how, when, and where they work.

Yet enacting the new ruling is not as simple as just sending employees home with their laptops. For Kirsimarja Blomqvist, a professor of knowledge management at LUT University, perhaps the most fundamental feature that remote work relies upon is a deeply rooted culture of trust, which Helsinki’s residents speak of with pride. The anecdotal evidence is backed up by data which suggests that Finland boasts one of the highest levels of trust and social cohesion in Europe, and equality and transparency have always been key cornerstones of political thought in the country.

“Trust is part of a national culture in Finland – it’s important and people value it highly,” she explains. “There’s good job independence, and people are valued in terms of what they do, not how many hours they work for. Organisations tend to be non-hierarchical, and there is a rich history of cooperation between trade unions, employers, and employees to set up innovative working practices and make workers feel trusted and valued. 

“It’s now important that we ensure that this trust can continue to be built over technology, when workers might have been more used to building it face-to-face.”

As companies begin to look hopefully toward a post-Covid future, the complexities of remote work are apparent. Yet amid issues of privacy, presenteeism, and social isolation, the Helsinki model demonstrates the potential benefits of a distanced working world. The adjustment to remote work, if continued after the crisis, offers a chance to improve companies’ geographical diversity and for employers to demonstrate trust in their workforce. On these issues, Blomqvist believes other cities and employers can learn a lot from Helsinki.

“People are now beginning to return to their workplaces, but even as they do they are starting to consider the crisis as a jumping point to an even more remote future,” she says. “The coronavirus pandemic has been an eye-opener, and people are now interested in learning from Finland’s good practices… We are able to see the opportunity, and the rapid transition to remote work will allow other countries to do the same.”