By John Bowker
LONDON (Reuters) - Japanese car maker Nissan <7201.T> has raised its UK production plans by about 5 percent and added 150 temporary workers as European scrappage schemes boost demand, a senior company director said on Friday.
The group, which axed 1,200 jobs at its Sunderland plant in northeast England in January, said it has seen a jump in demand in all major European markets offering scrappage incentives, including the UK where the government unveiled its plan in last month's budget.
Scrapping incentives, which pay car owners who scrap older vehicles to by new ones, have also been introduced in Germany, Spain, France and Italy.
"We have seen an awful lot more footfall in our UK dealerships since the government announced its scrappage scheme," said Trevor Mann, Senior Vice-President of Manufacturing at Nissan International.
Nissan, the biggest car manufacturer by volume in the UK and Japan's third biggest automaker, was forced to cut the number of vehicles produced annually in Sunderland from around 370,000-380,000 in 2008 to 280,000-290,000 this year due to falling demand.
As a result of the increase in demand due to the scrappage schemes, the company has agreed to add another 14,000-15,000 units, Mann said, adding that although it was only a small increase it could lead to further moves.
"The scrappage scheme is unpredictable, so we have to be prudent. We have given 150 workers four month contracts, and we will look at that decision again every month," he told reporters at a briefing.
The 1,200 employees cut earlier in the year left via a voluntary redundancy scheme, although 400 were temporary staff. Job losses have also been announced at Aston Martin and Jaguar Land Rover <TAMO.BO>.
British Chancellor Alistair Darling unveiled a scrappage scheme only after a similar concept had helped rescue demand in other European countries. It offers drivers 2,000 pounds towards a new car if they scrap one more than ten years old, with 1,000 pounds coming from the taxpayer and the rest from manufacturers.
Mann said the industry in general had been disappointed to be asked to foot half the bill, but said the scheme would still have a positive impact on the market.
"To put a financial burden on the manufacturers at a time when manufacturers were obviously struggling was not necessarily the best plan, but from the consumer's point of you it's all positive," he said.
"Anything that keeps the supply ticking over while the economy recovers is a good thing," he added.
The Society of Motor Manufacturers and Traders (SMMT) had been calling for the UK to implement a scrappage scheme for some months to arrest falling demand.
New car sales were down 28.5 percent for the first four months of the year, compared to the same period in 2008.
(Reporting by John Bowker, Editing by Ben Deighton/Richard Hubbard)