Honda Shutting UK Plant, Over 3,000 Jobs Imperiled

by Bamidele Ogunberu Posted on February 19th, 2019

Honda announced Tuesday it would shut a major plant in Britain, putting 3,500 jobs at risk as the auto manufacturer became the latest Japanese firm to downsize operations as Brexit looms.

The factory in Swindon, southwest England, is Honda’s only EU plant and has produced the manufacturer’s “Civic” model for more than 24 years, with 150,000 units rolling off the line annually.

The plant will shut in 2021, Honda announced, “at the end of the current model’s production lifecycle”.

The decision “has not been taken lightly and we deeply regret how unsettling today’s announcement will be for our people,” said Katsushi Inoue, chief officer for European regional operations, in a statement.

The firm blamed “unprecedented changes in the global automotive industry” for the decision but it comes amid investment uncertainty in Britain ahead of the country’s exit from the EU.

Speaking to reporters in Tokyo, Honda president Takahiro Hachigo said: “I’d like you to understand this is not related to Brexit.”

He said it was “very regrettable” to have to close the plant but said it was the “best choice” given the need to reduce production capacity and reform its global facilities.

The firm also announced it would stop manufacturing the Civic model in Turkey in 2021.

Honda joins fellow car giant Nissan as well as Japanese firms Sony, Panasonic and Hitachi in scaling back operations in Britain ahead of the country’s departure from the European Union.

Analysts say that while Brexit was almost certainly a factor for Honda, other reasons were likely to have played a part, including a massive EU-Japan free-trade agreement recently signed and the wider struggles of the car industry.

“Honda seems to have been preparing for this for a long time. Then Brexit happened, which might have pushed the company to make the decision now,” Seiji Sugiura, an analyst at Tokai Tokyo Research Institute, said.

Speaking ahead of the formal decision, local finance worker Sue Davis, 49, said the move would be “devastating” for the area.

“I think Swindon’s finished without Honda. My ex-husband works there, has done for 20 years. He’s going to be without a job, so I just think it’s really, really bad news.”

Local MP Justin Tomlinson tweeted ahead of Tuesday’s announcement that the decision had been made “based on global trends and not Brexit as all European market production will consolidate in Japan in 2021”.

– ‘Just in time’ –

Earlier this month, Nissan axed production of the X-Trail SUV in the Brexit-backing northeast city of Sunderland, despite government assurances over the consequences from the EU exit.

Nissan Europe chairman Gianluca de Ficchy said then that the cuts were made “for business reasons” but admitted that “the continued uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future.”

Auto giant Toyota also warned in February there would be no way to avoid a negative impact in the event of Britain crashing out of the EU without a deal.

Toyota executive vice-president Shigeki Tomoyama noted that the firm’s assembly plant in Burnaston, central England, which produces 600 vehicles per day, operates under the “just-in-time” system that relies on a smooth flow of components from the EU.

“We will have to halt the plant if the car parts are not brought in” from the continent, Tomoyama warned.

Japanese electronics giants Sony and Panasonic, as well as several banks, have moved some of their operations out of Britain since the 2016 referendum that set Brexit in motion.

Prime Minister Shinzo Abe pleaded against a no-deal Brexit in recent talks with his British and German counterparts, telling Theresa May last month: “We truly hope that a no-deal Brexit will be avoided and in fact this is the… wish of the whole world.”

And Japanese officials have reportedly become frustrated with their British counterparts as they negotiate a potential post-Brexit trade deal.

Britain is due to leave the EU on March 29, but its parliament last month rejected a draft divorce deal May negotiated with the bloc, prompting fears the country could crash out without an agreement next month.

‘A Devastating Decision’ Says Minister

Honda’s decision to shut its UK plant in Swindon with the loss of 3,500 jobs is “devastating”, Britain’s Business Secretary Greg Clark said Tuesday.

“As Honda have said, this is a commercial decision based on unprecedented changes in the global market. Regardless, this is a devastating decision for Swindon and the UK,” Clark said in a statement.

“This news is a particularly bitter blow to the thousands of skilled and dedicated staff who work at the factory, their families and all of those employed in the supply chain.

“I will convene a task force in Swindon with local MPs, civic and business leaders as well as trade union representatives to ensure that the skills and expertise of the workforce is retained, and these highly valued employees move into new skilled employment.”

Clark added: “The automotive industry is undergoing a rapid transition to new technology. The UK is one of the leaders in the development of these technologies and so it is deeply disappointing that this decision has been taken now.”

Honda earlier said that its only EU plant will shut in 2021, becoming just the latest Japanese firm to downsize operations in Britain as Brexit looms.

Image: Workers wait for the launch of the first British built Honda Jazz family supermini to leave the production line at the Honda car plant in Swindon, western England. Max

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Bamidele Ogunberu

Bamidele Ogunberu

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