LONDON (AFP) – Honda will shut its United Kingdom (UK) plant with the loss of 3,500 jobs, the Japanese car maker announced yesterday as the global auto industry faces “unprecedented changes” and the UK economy hits the skids on Brexit uncertainty.
The factory in Swindon, southwest England, which is Honda’s only European Union (EU) plant, will shut in 2021 “at the end of the current model’s production lifecycle”, the company said as carmakers worldwide increasingly invest in greener electric vehicles over diesel cars.
Business Secretary Greg Clark described Honda’s decision as “devastating” and “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”.
Honda’s Chief Officer Katsushi Inoue for European regional operations said the decision had “not been taken lightly”.
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 departure from the European Union next month.
Analysts said an EU-Japan trade agreement signed recently had likely also played a part in Honda’s decision.
Clark said that while Honda’s decision was made for “commercial” reasons, it was nonetheless “devastating… for Swindon and the UK”. He added in a statement: “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.”
Speaking earlier in Tokyo, Honda President Takahiro Hachigo told reporters, “I’d like you to understand this is not related to Brexit.”
Nevertheless, it comes after Japanese peer Nissan earlier this month axed plans to make its X-Trail SUV in the Brexit-backing UK city of Sunderland, citing “business reasons” but also uncertainty over Britain’s EU departure.
Toyota, another Japanese car giant making vehicles in Britain, has meanwhile warned there would be no way to avoid a negative impact should the UK crash out of the EU without a deal.
The Bank of England earlier this month slashed its forecast for 2019 UK growth to 1.2 per cent from 1.7 per cent, blaming the downgrade on a global economic slowdown and “the fog of Brexit”.
Honda’s fellow Japanese firms Sony, Panasonic and Hitachi are also scaling back their UK operations.
Regarding Honda’s decision, the company “seems to have been preparing for this for a long time”, analyst at Tokai Tokyo Research Institute Seiji Sugiura told AFP.
“Then Brexit happened, which might have pushed the company to make the decision now.”
The carmaker’s Swindon plant has been producing Honda’s Civic model for more than 24 years, with 150,000 units rolling off the line annually.