NISSAN has warned its UK suppliers of drastic cost-cutting measures that could force the Japanese company to source more components from overseas in a bid to remain competitive. Managing director John Cushnaghan says the strength of the Pound against the Euro over the last three years has eroded gains made in productivity by the UK workforce at Nissan's Sunderland factory - the most productive car plant in Europe for the last three years.

Addressing the Sunderland Automotive Conference he said: 'Competition within the Nissan group for new products is intense. 'We face the most severe challenge ever to secure our future. This will only be done by some radical thinking about the way we operate and by taking efficiency and cost reduction on to a new plane.'

Nissan has 135 suppliers in the UK and spends £800 million with them each year. But Cushnaghan told the conference: 'The choices of component suppliers for the Renault/Nissan alliance are now much wider, resulting in exposure for Nissan's UK suppliers to unprecedented competitiveness.'