As Brexit nears, Honda plans to shut plant in England
LONDON — Japanese automaker Honda has become the latest business to make plans to leave Britain as global forces reshape the car industry and the country prepares to exit the European Union, a process known as Brexit.
Honda will close its plant in Swindon, England, which employs 3,500 workers, by 2021, according to a statement from two members of Parliament, Justin Tomlinson and Robert Buckland, who have been in contact with the carmaker.
Honda declined to respond to queries about the move, reported earlier by Sky News. “At this point, we are not able to make any comments regarding the speculation,” the company said in an emailed statement. “We take our responsibilities to our associates very seriously and will always communicate any significant news with them first.”
But in a joint statement, Tomlinson and Buckland confirmed media reports about the upheaval and said they were “disappointed and surprised” that the plant would be gone in two years.
“Honda have told us today that they will be consulting with all staff and there is not expected to be any job losses or change in production until 2021,” the lawmakers said in an emailed statement. “All European market production is being consolidated to Japan, where the company is based.” They also said production in Turkey would be affected.
Honda follows other companies that have retrenched in the face of sluggish markets, tougher environmental regulations and challenges from deep-pocketed technology companies that are pursuing electric and autonomous driving cars.
Last month, Ford said it was cutting thousands of jobs across Europe as emissions rules and declining demand ate into its profits. General Motors pulled out of Europe in 2017 after persistent losses in the region.
But the losses in Britain, coming as the country tries to leave the EU, have been striking.
Nissan said early this month that it would be producing the next generation of its X-Trail SUV at its Kyushu plant in Japan rather than at its factory in Sunderland, England. That plant will continue to manufacture other models.
Like Nissan, Honda stands to benefit from a new trade deal between the EU and Japan, which will make it easier to produce cars in Japan for export to the bloc. Their production lines in Japan will also be closer to markets viewed as having greater growth potential, such as China and Indonesia.
The sales market is changing across the globe. Car sales to individual customers appear to have peaked in the U.S. last year. An economic slowdown in China has deflated sales there. Silicon Valley tech companies are increasingly competing for talent among manufacturers.
“All of that is taking a huge amount of resource out of car companies,” said Peter Wells, a professor at the Centre for Automotive Industry Research at Cardiff Business School in Wales. “They’ve got to access those new markets, restructure their operations; it’s an enormous burden financially. It’s putting strain on the whole sector.”
“It’s all going on around this industry, and it’s proving to be a turbulent strategic time for the participants,” he said.
The continued stalemate over Brexit has made it more difficult for businesses to plan their operations past March 29, the day England is expected to separate from the EU.
Investment in the country’s auto industry plummeted by half last year, prompting a recent plea from the automakers’ trade association.
“Brexit is the clear and present danger and, with thousands of jobs on the line, we urge all parties to do whatever it takes to save us from ‘no deal,’” said Mike Hawes, CEO of the Society of Motor Manufacturers and Traders, referring to the prospect of Britain leaving the EU without an agreement over the terms of departure.
The Honda decision is one of a series of unhappy announcements in Britain in recent months. British carmaker Jaguar Land Rover has said it would be cutting 4,500 people from its workforce because of “geopolitical and regulatory disruptions.” Dyson, the appliances company known for its vacuum cleaners, is moving its headquarters from southwest England to Singapore as it prepares to bring an electric vehicle to the market.
Nissan’s chairman in Europe, Gianluca de Ficchy, said the company’s decision to adjust its assembly line was not based solely on Brexit but that “the continued uncertainty around the U.K.’s future relationship with the EU is not helping companies like ours to plan for the future.”