business

Honda to close UK car plant in 2022 with loss of 3,500 jobs

36 Comments
By Costas Pitas and Guy Faulconbridge

Japanese car maker Honda is set to announce it's closing its only British car plant in 2022 with the loss of 3,500 jobs, a lawmaker told Reuters, in the latest blow to the UK car industry as Brexit approaches.

A closure of Honda's Swindon factory in southern England would be its second plant shuttering in 2022. The automaker said more than a year ago it will close one of its Japan plants in 2022, in an effort to consolidate production as it focuses on new vehicle technologies.

Honda built over 160,000 vehicles at Swindon, where it makes the hatchback version of its popular Civic model, accounting for a little more than 10 percent of Britain's total output of 1.52 million cars.

But it has struggled in Europe in recent years, and the industry faces a number of challenges including declining diesel vehicle demand and tougher regulations alongside the uncertainty over Britain's departure from the European Union, due next month.

Justin Tomlinson, a Conservative lawmaker for Swindon who voted for Brexit in 2016, said he had met with the business minister and representatives from Honda who had confirmed the plans.

"They were due to make a statement tomorrow morning, it's obviously broken early," Tomlinson, lawmaker for North Swindon, told Reuters.

"This is not Brexit-related. It is a reflection of the global market. They are seeking to consolidate production in Japan."

Honda said it would not be providing any comment on the"speculation".

"We take our responsibilities to our associates very seriously and will always communicate any significant news with them first," the firm said.

Honda announced in October 2017 it would stop making vehicles at its Sayama plant in Japan by 2022 as it grapples with a shrinking domestic market.

Like many of its global rivals, Honda is trying to streamline its operations as it invests heavily to develop electric vehicles and self-driving cars, transforming itself from simply a manufacturer of cars into a mobility company.

Japan has repeatedly warned it could pull investments in Britain, which it had seen as a gateway into Europe, if London does not secure a Brexit deal favorable for trade.

The recently agreed EU-Japan trade agreement means tariffs on cars from Japan to the continent will be eliminated, while Britain is struggling to make progress on talks over post-Brexit trade relations with Tokyo.

Honda's announcement would come just over two weeks after bigger Japanese car maker Nissan cancelled plans to build its X-Trail sport utility vehicle in Britain.

In January, Britain's biggest automaker Jaguar Land Rover said it would cut 10 percent of its workforce, mainly at home, due to sluggish sales to China and a slump in European diesel demand.

"The car industry in the UK over the last two decades has been the jewel in the crown for the manufacturing sector – and now it has been brought low by the chaotic Brexit uncertainty," said Des Quinn, national officer for the automotive sector at Unite, Britain's biggest trade union.

Honda said last month it would shut its British operations for six days in April to help counter any border disruption from Brexit. It was also preparing to front-load some production at its plant to ship overseas or build up inventories.

Nissan, Honda and a third Japanese car maker, Toyota Motor Corp, together account for roughly half of the cars built in Britain.

Honda, which has been building more cars for sale outside of Europe in recent years, said earlier this month its production volumes at Swindon would be reduced to 570 cars per day and that it would make job cuts.

"This reduction in volume will not have any impact on our permanent resource levels, and is in line with our current production plans," the company said.

© (c) Copyright Thomson Reuters 2019.

©2019 GPlusMedia Inc.

36 Comments
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Very unfortunate, perhaps a big mistake.

-11 ( +1 / -12 )

This is not Brexit-related. It is a reflection of the global market

So they say

11 ( +15 / -4 )

Japan has repeatedly warned it could pull investments in Britain, which it had seen as a gateway into Europe, if London does not secure a Brexit deal favorable for trade.

Who has warned?

What a nonsensical statement!

In fact, the UK has a trade surplus with Japan and due to confusion over Brexit the Japanese government is holding out for a possible post Brexit trade deal to its advantage.

Japan’s government has its self interest at the top of the list.

-7 ( +4 / -11 )

It's all because of customer service.

they do need to make new shape, new model but mostly they need to check how the customer service are shown in UK and make sure the staff deal every customer equally.

What is happening in Britain is that the European staff working for Japanese or other Asian companies are not giving good customer service which they do it on purpose so that the European companies can overtake them. It's a slow poison.

-14 ( +3 / -17 )

Actually i was more impress with that picture then the article itself.

-5 ( +2 / -7 )

The Bexiteer fantasists cannot admit that Brexit was a large factor in this and other closures.

13 ( +18 / -5 )

I didn't even know they made Japanese cars in the UK, let alone sell them.

-17 ( +1 / -18 )

Who has warned?

There have been many media reports of Abe warning May about the need for some certainty about Brexit. Here is one example:

https://www.theguardian.com/politics/2018/dec/01/shinzo-abe-to-theresa-may-avoid-a-no-deal-brexit-eu

In fact, the UK has a trade surplus with Japan 

That's news to me. Do you have a source?

9 ( +10 / -1 )

With combustion engines, in particular diesels under threat in Europe, retooling factories for new vehicles is expensive. Added to the threat of tariffs between the U.K. and EU it’s the expedient move to repatriate the work to Japan.

9 ( +9 / -0 )

The timing of 2022 is interesting- I wouldn't be surprised if that is when the current generation of the Civic and CR-V is scheduled to end production. They might let these current models run their course, and then shutter the plant. Make of that what you will.

It's a shame too, the current Civic is generally understood to be an excellent car, although the looks aren't for everyone.

4 ( +4 / -0 )

So after the Nissan decision to not produce the X-TRAIL in the UK story from the other week, I decided to do a little research...

Turns out the new trade deal signed between the EU and Japan means that it is now more cost effective for Japan to produce the cars in Japan and ship them directly to the EU. This is because of changes to tariffs.

Also, the amount of sales has slumped for certain car manufacturers over the last 5 years in the UK/EU. Especially diesel models. Again, this has been due to EU regulation.

Finally, a friend of mine who happens to work at the Swindon plant has told me the plant has been in decline for years and although Brexit will have been a factor, it still wouldn't have changed the outcome.

0 ( +7 / -7 )

kurisupisuToday  07:11 am JST

Japan has repeatedly warned it could pull investments in Britain, which it had seen as a gateway into Europe, if London does not secure a Brexit deal favorable for trade.

Who has warned?

What a nonsensical statement!

In fact, the UK has a trade surplus with Japan and due to confusion over Brexit the Japanese government is holding out for a possible post Brexit trade deal to its advantage.

All manner of businesses are reducing if not abandoning their presence in the UK. Even white collar businesses, notably law and finance, are leaving London for the continent. Nissan and Toyota have already announced departures. There is no confusion here. Brexit will reduce UK GDP by as much as 20%.

https://www.bloomberg.com/news/articles/2018-10-03/japan-waves-goodbye-to-u-k-as-gateway-to-europe-post-brexit

https://www.independent.co.uk/news/uk/politics/japan-brexit-theresa-may-ambassador-uk-leave-deal-profit-nissan-mazda-car-manufacturing-deal-trade-a8201286.html

https://www.bloomberg.com/news/articles/2018-11-07/why-may-closing-in-on-a-brexit-deal-can-t-stem-a-business-exodus

3 ( +6 / -3 )

"In fact, the UK has a trade surplus with Japan 

"That's news to me. Do you have a source?"

The UK has a "mammoth" surplus of....1 Billion!!!!!

https://www.theguardian.com/politics/2019/feb/08/japan-seeking-big-concessions-from-britain-in-trade-talks-eu-brexit

Project fear is morphing into project "we fcuk told you so".

-4 ( +4 / -8 )

That's a big blow to the people of Swindon.

Experts warned of the dangers of Brexit, and now some people act surprised and get all mardy about it?

11 ( +12 / -1 )

As somebody pointed out, the E.U. has dramatically reduced Tariffs on Japan making it more cost effective to produce cars in Japan, then export them to the EU directly, rather than build them in the U.K., and export them from there. The lower price due to lack of Tariffs could also increase their popularity. In the U.S. Japanese cars are over 40% of all cars sold, because of both quality and price. If the price becomes competitive it could increase their total market share in the E.U. (I wonder if this was a play by the E.U. to hurt the U.K. for Brexit?)

4 ( +5 / -1 )

Takin' back control!

-2 ( +3 / -5 )

What UK needs now is supporting and understanding. Japan can do this later when UK exits from EU, if economics demands it. EU can't exist without UK, and UK can't exist without EU. Exit or not, EU and UK will be tied together by genetics. Japan made a huge mistake.

-11 ( +1 / -12 )

EU can’t exist without UK

Yes, it can.

UK can’t exist without EU

Yes, it can.

Exit or not, EU and UK will be tied together by genetics.

This makes no sense at all.

-6 ( +2 / -8 )

I believe Honda was struggling which was the initiating factor in considering this closure however Brexit probably sealed the deal in their eyes. I am currently dealing with a couple of Japanese clients with the EU headquarters in the UK. The amount of factors that need to be considered (i.e. taxation, conformity to technical standards, etc.) is huge.

Based on what I have experienced with my Japanese clients and also discussing this with UK companies (not Japanese companies but UK companies) I think in this case the UK Parliament should have backed Theresa May and given this another 2 years to work more of the issues out. Would this have changed Honda's mind? Probably not.

Removing emotions from this issue and looking from the outside it just seems there are so many factors that need to be considered that this can turn into a real mess.

2 ( +3 / -1 )

Honda is consolidating all European manufacturing/production to Japan. The Honda Factory in Turkey is closing too. Toyota could well follow suit. Consider the new EU Japan Economic Partnership Agreement, tariffs will fall from 10% to zero by 2027.

UK's withdrawal from the European Union would certainly affect supply chains, however the business model to build/assemble new and existing models in Europe just isn't viable.

3 ( +3 / -0 )

Aren't Honda the second biggest hybrid manufacturer after Toyota? I doubt diesels are such a factor for them. If diesels are to be banned, hybrids are best placed to gain sales.

That leaves the risk of hard Brexit and the Japan-EU agreement as the main factors. From the outside, it is hard to know anything with certainty. However, Japanese business leaders have always said they saw the UK as part of Europe, even to an extent that appears like meddling. At least part of this move looks Brexit-driven.

3 ( +3 / -0 )

Heaven forfend that the Brits are forced to start making their own stuff again. The Tories turned Britain into a mercenary’s paradise, so what did they expect foreign companies would do in an economic downturn?

-1 ( +1 / -2 )

Importing cars from Japan to the EU will be tariff-free, whereas importing to the remaining EU 27 from the UK may not be. So Brexit is certainly a factor here if not the only one. Exactly the same as the recent Nissan decision not to expand as they had planned.

5 ( +5 / -0 )

EU can’t exist without UK*

Yes, it can.

The EU, as you said, will be perfectly fine without the UK.

UK can’t exist without EU*

Yes, it can.

Well... here is where I disagree with you, yeah the UK will exist without the EU, but not in anywhere near the same degree. The UK economy is going to contract around 9% according to some generous estimates. It could even be worse than that. The border implementation between Northern Ireland and Ireland could see a resurgence of violence likened to the Troubles of the 70's and 80's again...

But then again, the only way to convince an idiot is to show them what happens... so, good luck to Britain, you guys are gonna need it..

7 ( +9 / -2 )

This is a result of the recent EU-Japan trade deal. With the abolition of import tariffs Japanese manufacturers no longer have a reason to locate factories in the EU: they can, and will, make everything in Japan.

Meanwhile, we will get cheaper cheese in 15 years time (subject to quotas). We can also be sure that the Japanese government will never award large contracts to a non-Japanese company, despite all the guff in the deal about removing non-tariff barriers. It seems Japan has the better trade negotiators.

5 ( +5 / -0 )

Japanese car manufacturers are facing an onslaught of Chinese EVs. Europe is introducing laws to force people to buy EVs. Japan needs to withdraw and concentrate on being able to deal one way or another with the fast approaching future of automobiles.

Brexit is simply a convenient excuse to get out. And then to add demurely that 'it is not really a factor' is as easy as pie.

-2 ( +2 / -4 )

Japan made a huge mistake.

Honda, not Japan, did this.

Also they had pretty good reason to, so I don't think it was a mistake.

0 ( +1 / -1 )

This is not Brexit-related. It is a reflection of the global market.

Yeah. Right. What a muppet.

6 ( +7 / -1 )

The price of regaining independence. It will be a painful process. But I can understand why British people chose this path. I wouldn't want my country's policies and laws be dictated by a foreign council.

-5 ( +3 / -8 )

I'm sorry to see Honda leave the UK, but there is life after Japan.

0 ( +2 / -2 )

The price of regaining independence. It will be a painful process. But I can understand why British people chose this path. I wouldn't want my country's policies and laws be dictated by a foreign council.

52% of those who voted did so to leave. Not 52% of the population.

0 ( +1 / -1 )

I wouldn't want my country's policies and laws be dictated by a foreign council.

Its not foreign, the UK head of state sits on the EU Council and it is represented in the Commission as well (and its the latter, not the council, that sets policies and laws).

From March 29th of course it will actually become foreign, and the UK will for the first time know what its like to have its laws and policies dictated by a foreign entity since it'll have to continue following EU rules in most areas if it wants to maintain access to the EU market. Now it just won't have any say in making those rules and policies.

Ironic.

1 ( +2 / -1 )

So many people giving into ‘scenarios’ about deleterious effects of Brexit.

Sad!

Well, sorry but you are wrong-the UK will adjust and be rid of the undemocratic black hole behemoth that the EU has become!

I’m confident that my investments in the UK will show better than expected in the next few years.

Good riddance the EU!

0 ( +2 / -2 )

Its not totally Brexit alone, but yes, Markets have changed and if Britain is now on outside of Europe just as Japan is, it comes down to which Government can provide the biggest sweetener to the Company to go to. It's Natural that Japan Govt would do this... unlike the British Governments of past which simply sold off their assets etc to other Countries particularly - India etc, (and note, after Brexit, it will be the India Presence that turns the UK into Civil war as their involvement has been likened to Cuckoos / locusts - creating pockets of insular foreignness which has played into the hands of Brexiteers to date, they will sadly become the next focus of attention)

f you're smart, sell out of the UK and move out.

0 ( +0 / -0 )

The UK has a "mammoth" surplus of....1 Billion!!!!!

Thanks for the link. I think the figures in that article may be from 2016. I can't find any more recent data that is complete on UK-Japan trade figures. It seems the UK ran a surplus with Japan between 2014-2016.

I found that if the figures are limited to trade in goods only (not services), then Japan has a very large trade surplus with the UK. So now I'm wondering about the nature of those services. Does anyone know?

0 ( +0 / -0 )

The Bexiteer fantasists cannot admit that Brexit was a large factor in this and other closures.

Probably because the "fantasists" are correct. The people actually involved in the deal have clearly stated Brexit has nothing to do with it. Honda is in fact pledging to keep the UK as its European headquarters, despite the claim by the Remoaning fantasists that Brexit would trigger an outflux of foreign HQs.

I wouldn't want my country's policies and laws be dictated by a foreign council.

Indeed. The vast majority of citizens in US, Canada, Japan and most other countries would never accept "free movement." Yet they slam the British people for rejecting it. Hypocrisy much?

0 ( +1 / -1 )

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