The Multiplier Effect & Nissan

The Multiplier Effect …………….. the way in which a new development in an area encourages further economic growth in that area e.g. a new factory comes to an area, then shops open up nearby.

What is it? • The 'Multiplier Effect' is a method by which job opportunities and wealth are created by attracting new industry into an area. By introducing a new industry, it is hoped that industries 'linked' to that industry will follow (see above for linkages) and increase the amount of job opportunities and wealth of those people with the resulting jobs. This has many knock-on effects that 'multiply' the wealth in an area: people have more money to spend, and so local shops and other services benefit and can possibly expand both their range of services and size, and in turn all of these effects can create the money needed to enhance the infrastructure and image of the area. The result of this is more industry is attracted to the area.

How it works. Location of a new factory

Increase in local employment

Increase in local population

Increase in demand for local products and services

Service industries are attracted

Pool of trained labour develops.

Local industries and services expand

Local council invests more on factory sites

Local council benefits from increased tax

Local wealth expands

Nissan Multiplier effect 4000 people employed directly, but 3000 people employed indirectly Assembly line production requires constant deliveries of components.

Since 1984 – 28 Japanese companies have chosen to locate in Sunderland

“Ikeda Hoover are literally at the factory gates”

Nissan contributes £500 million per year to the regions economy

As the car industry grows, so does Nissan and the space it needs

High quality riverside housing built for managers

Doxford International and Leechmeer Industrial parks built. Now there are no industrial sites left in the locality. New Sunderland Football stadium built from increased government cashflow. Unemployment decreased in the area, changing the image of Sunderland as a whole.

Cleaning and catering firms have sprung up in Washington since 1984

Local government created extra enterprise zones around Nissan to support supply industries.

Transport links were developed for commuters, employing more bus and train drivers. Government helped fund the National Glass Centre and Sunderland International Air show.

Business tourism increased. Visitors to Automotive International Conferences. Extra Conference venues were built.

Increased investment has developed the area as a major manufacturing centre in advanced and high technology processes.

Local Universities and Further Education received a major boost. More students were attracted and more staff were needed.

Tourism

Government

Supply Industries

Infrastructure

Fishbone Diagram

Nissan Factory

Other