Honda has confirmed plans to close it’s UK manufacturing base. The assembly plant located in Swindon will cease operational productivity in 2021. Honda cites changing global trends behind the decision. Another reason, perhaps, is tough new emissions sanctions against diesel cars which then spiralled into a slump in demand.
Honda pointedly stated that Brexit was not behind their decision. However with a few weeks to go before Britain official declares it has exited the EU, it seems Honda had no desire to be invited to the leave celebrations.
If the UK does leave the EU it is almost certain Honda will be hit with numerous embargoes and EU sanctions. As such the business case for Honda to retain a UK manufacturing base looks less and less attractive.
Their decision must have been bolstered by the Conservative Party’s chaotic administration of Brexit which has emboldened both remain and Brexit businesses to move their operations outside of the UK.
When Honda does leave in 2021 it will mark the end of over 30 years of vehicle production in the UK. Over 90 percent of output is shipped into the EU. Last year the Honda Swindon plant made 150,000 Civic models. However demand has fallen, in 2014 Honda suspended production in order to avoid over capacity.
Honda will retain it’s UK headquarters. But that will not be of any comfort to the 3,500 workers who will lose their jobs. In addition, thousands of more jobs are at risk due to the external supply chain that exists around the manufacturing plant.
Honda says they will move production of the Civic back to Japan. At the same time, the Japanese government is negotiating a treaty with the EU to gradually eliminate tariffs (10 percent to zero) on Japanese imports over the next 10 years.
Currently, Honda is restructuring its business model from fossil fuelled cars to electric vehicles. The company also plans to close an ageing manufacturing plant in Japan as it makes the transition.
Honda also has a manufacturing plant in Turkey which is not earmarked for closure. It may well be the case that Honda plans to move future EV production to Turkey.