Honda Motor Co. plans to close its factory in the U.K. in the biggest blow yet to the British auto industry already buckling under thousands of job cuts and the loss of key models in the run-up to Brexit.
The site in Swindon, about 80 miles west of London, is the nation’s fourth-largest automotive plant and employs about 3,500 workers where the Honda Civic hatchback is made. Production for Europe will consolidate in Japan in 2021, Justin Tomlinson, MP for North Swindon, said on Twitter. Honda also plans to cease production in Turkey, where the company makes the Civic sedan, he said. Honda had no immediate comment on its plans.
The U.K. has long been a Japanese hub for European auto production, with Honda, Nissan Motor Co. and Toyota Motor Co. owning three of the country’s six largest carmaking factories. That’s quickly unraveled, with Nissan this month reneging on plans to built the X-Trail sport utility vehicle in Sunderland -- partly due to the unresolved status of EU-U.K. trade after Brexit.
U.K.-made products also risk being disadvantaged by a new treaty that will gradually eliminate tariffs on Japanese imports to the EU, though Tomlinson, a pro-Brexit Tory, said the divorce wasn’t a factor in Honda’s move.
“They are clear this is based on global trends and not Brexit,” Tomlinson said. “Honda will be consulting with all staff and there is not expected to be any job losses or changes in production until 2021.”
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Honda, for its part, declined to comment on the closure.
“At this point, we are not able to make any comments regarding the speculation,” the company said. “We take our responsibilities to our associates very seriously and will always communicate any significant news with them first.”
The EU-Japan Economic Partnership Agreement, in force since Feb. 1, ensures that the bloc’s 10 per cent tariff on Japanese car imports will be reduced to zero over the next 10 years.
The treaty makes it easier for Japanese automakers to localize production at home for sale in the EU, consulting firm LMC Automotive said in a research report earlier this month. The U.K. is most at risk almost half of the cars made in the country are Japanese branded, and Japanese automakers want to increase utilization of plants at home.
“Brexit adds another dimension,” LMC’s director of global production forecast, Justin Cox, said in the Feb. 11 report. “Should Britain leave without a deal and WTO tariffs are applied to U.K. vehicle exports, the same cars made in Japan may well end up costing less to import into the EU than those produced just over the Channel in England.”
The U.K. industry has already been battling Brexit-related slowdown, potential tariffs and supply bottlenecks after leaving the trade bloc on March 29. U.K. lawmakers are yet to find a solution to avert a no-deal split from the EU.
Ford Motor Co., in announcing thousands of job cuts in Europe, last week said a hard Brexit would be “ catastrophic” for the U.K. auto industry and its own engine-production facilities. Jaguar Land Rover, Britain’s biggest carmaker, said in January it would scrap 4,500 positions in response to a sales slowdown blamed on Brexit, as well as a drop in China sales and slumping diesel demand. PSA Group’s Vauxhall Ellesmere Port site is in doubt as it mulls plans for the next Astra.
The Unite union, which represents workers at the Swindon plant, is seeking clarification from Honda, Des Quinn, national officer for the automotive sector, said in an email. The closure, the biggest since 2005, would affect thousands more jobs across Honda’s U.K. supply chain, he said.
As the political impasse drags on, investments in the British automotive industry nearly halved last year to 589 million pounds (US$761 million), the lowest since the global financial crisis, according to the Society of Motor Manufacturers.
Barring a Brexit deal that gives the U.K. easy access to the EU, it won’t be possible to reverse the Japanese exodus, Han Dorussen, a professor in the department of Government at the University of Essex, wrote this month in a report.
“Since the mid-1980s, the U.K. has become Japan’s gateway to Europe,” Dorussen wrote. “Without free and open trade between the U.K. and the rest of the EU, Japanese companies will not be impressed by any U.K.-Japan trade deal.”