A factory town in crisis shows Japan’s fading manufacturing era

TOKYO – Nissan Motor’s Oppama factory, opened in 1961, was once a crown jewel in Japan’s post-war rise to manufacturing powerhouse. 

Today, it represents the dangers of being caught flat-footed in a rapidly changing industry. 

The factory, about 48km south of Tokyo, is set to shut by March 2028 – part of Nissan’s wide-ranging restructuring after a slump in sales sparked its worst financial crisis since Renault rescued the carmaker from near bankruptcy a quarter-century ago. 

Once synonymous with cutting-edge technology, Japan’s legacy brands are struggling to adapt to changing consumer tastes, ceding market share to the likes of Tesla and a wave of Chinese upstarts led by BYD.

That means whatever happens to Oppama – and the thousands of local residents who depend on it – will serve as a warning for Japanese manufacturers as intensifying competition sparks a painful period of consolidation that could pave the way for much-needed rejuvenation. 

It’s also a new era for the Japanese economy, as a wave of bankruptcies among small and medium-sized firms across industries from transport to technology challenges the idea of “shushin koyo” – a job for life.

Like any factory town, Nissan’s ties run deep.

It directly employs almost 10 per ent of Oppama’s 29,700 residents.

Field trips to the plant are a rite of passage for local schoolchildren and the company revived its baseball team in 2025 after a 16-year hiatus, though it lost in the semi-finals to ultimate tournament winner Toshiba. 

A victory would have provided a welcome distraction, said Mr Yuji Fujita, the third-generation owner of a fresh-produce store in the shopping avenue that runs between Oppama’s train station and the factory.

He drew parallels with the shutdown of Nissan’s Zama plant in 1995, which marked the first factory closure in Japan by any carmaker in the post-war period.

“This is the worst-case scenario,” said Mr Fujita, whose family has owned about two dozen Nissan cars over the years. “It’s impossible to know what will happen to us now.”

His sentiment is echoed around town.

It is not clear yet how many of the 2,400 people employed at Oppama will be transferred to a Nissan factory in Kyushu, about 966km to the south-west, or when they will start their new roles.

“The priority now is to figure out what options will be offered to existing employees,” said Mr Keiichi Asakura, general secretary of the Nissan Motor Workers’ Union. 

There is also uncertainty about what will happen to the site that spans 1.7 million sq m.

Speculation has swirled among residents that it could be turned into a holiday resort or theme park, or even used by the private defence industry.

Nikkei reported in early July, before the announcement that Oppama will close, that Nissan is in talks with Taiwan’s Hon Hai Precision Industry – better known as Foxconn – over the site. 

Nissan chief executive Ivan Espinosa has said he is not considering contract manufacturing.

And plans are complicated by the need to rewrite the town’s civil laws to reflect a change in utilisation.

Mr Katsuaki Kamiji, the mayor of Yokosuka, the city where Oppama is located, said he spoke to Mr Espinosa in late July to advocate for a future that provides ongoing employment for residents.

“We urged him to take into account, as much as possible, the creation of jobs, the region’s revitalisation and the growth of Yokosuka when weighing how the property will be utilised,” he said in an e-mailed statement.

Fading fortunes

While the announcement that Oppama will close was a surprise for some, residents have known for some time that Nissan’s fortunes were fading, said Mr Nakao Habutsu, superintendent of the Oppama Administration Centre.

In 2007, when it celebrated having produced 15 million vehicles, Oppama still made seven different models.

In 2010, the town was given a fresh boost by Leaf – the world’s first mass-market all-electric car that was set to transform the automaker into a global leader in innovation.

But Leaf production started to shift to the US and the UK in 2013. Now, Oppama makes just two models: the Note subcompact hatchback and the Aura, both for the domestic market.

Tesla’s offerings have usurped the Leaf as the best-selling electric vehicle (EV) in history.

But it is the Chinese that have emerged as an industry superpower, offering sleek high-tech models at a variety of price points.

Nissan’s limited all-electric line-up is spearheaded by the Sakura, the Ariya and the Leaf, which is getting a makeover in the hope of lifting sales.

Production cuts

The lack of blockbusters is core to Nissan’s troubles, though Mr Espinosa has said that once Oppama is shut, there are no plans for further consolidation in Japan. 

All told, Nissan wants to reduce annual output to 2.5 million units from 3.5 million by consolidating production from 17 factories to 10, and will cut 20,000 jobs.

The carmaker is likely to see 160 billion yen (S$1.39 billion) in impairments and restructuring charges this financial year, chief financial officer Jeremie Papin said during an event hosted by investment management company Sanford C. Bernstein. 

Mr Espinosa has been firm that Nissan does not need a saviour to get it back on track.

Talks to combine with Honda Motor fell apart earlier in 2025, but its downturn attracted interest from Foxconn and KKR & Co. 

So far, it is the sprawling network of small, speciality-parts suppliers that have borne the brunt of the auto sector’s challenges.

There were 32 bankruptcies during the fiscal year that ended in March, the most in a decade, according to Teikoku Databank. 

There is likely to be more consolidation to come as companies that specialise in EVs, autonomous driving and high-efficiency engines thrive, while others look to attain that expertise through mergers and acquisitions, according to Mr Satoru Shinozuka, an analyst at Teikoku Databank. 

“If they don’t have the technology or the capital, it’ll be difficult,” said Mr Shinozuka. It’s “survival of the fittest”, he said. BLOOMBERG