Honda confirms Swindon factory closure following consultation

Honda Civic Swindon factory

Honda’s Swindon plant produces 150,000 cars per year

Japanese manufacturer says no “viable alternative” could be found to keep plant open; 3500 workers set to lose jobs

Honda has confirmed that it will close its manufacturering plant in Swindon in 2021, saying that it could not identify any “viable alternatives” following a period of consultation.

The Japanese firm announced plans to close the factory, which currently builds the Civic, in February, putting 3500 jobs at risk. At the time, it said the move was due to “unpredecented changes in the global automotive industry”.

In its latest statement, Honda said that the need to accelerate its electification plans meant that “resources, capabilities and production systems for electrified vehicles will be focused in regions with a high volume of customer demand”.

Honda says it has undertaken a “meaningful and robust” consultation period since then, which included contributions from the UK government, unions and other outside groups. But it said that phase has now concluded, and staff at the factory were informed this morning (13 May) that the closure would go ahead in 2021, when the current Civic reaches the end of its lifecycle.

The Swindon factory closure: how Honda got it so wrong

The firm will now begin the second phase of the consultation, which includes finalising redundancy packages and “identifying the impact on individual roles up until production ceases in 2021”. Honda said it will also consult with the Swindon Task Force set up by Secretary of State Greg Clark to “mitigate the impact of this decision on the wider community”.

The closure would result in 3500 job losses. The Wiltshire factory, which builds only the Civic, currently produces 150,000 cars annually – far from its capacity of 250,000 units.

The closure is a huge blow for the government’s hopes of the UK remaining an established car manufacturing hub post-Brexit. While Brexit hasn’t been cited as a reason for Honda’s plans, it is the latest factor in a perfect storm for the industry.

Analysis: Brexit and the UK car industry

Already this year, Jaguar Land Rover has announced 4500 job losses, Nissan has confirmed it will no longer build the X-Trail in Sunderland and Ford has said there will be job losses at its plants.

Honda has been slow to react to electrification compared to its rivals. It launched its CR-V Hybrid last year but doesn’t offer any electric models, although its Urban EV, a retro-styled electric city car, is due to go on sale late this year.

The firm’s intention is to consolidate much of its manufacturing back to its home country of Japan. This will allow it to ship to China – one of the markets where “high production volumes” are expected – fairly easily.

The deal that the Japanese government has recently struck with the European Union (EU) is likely to be another motivating factor. It means tariffs on Japanese-made cars coming into the bloc’s 27 member states will be phased out from this year, reducing the financial benefit of Honda having a UK hub.

The threat of import tariffs for European-made cars from Donald Trump’s administration will also be a factor, because the US is one of the Civic’s main markets.

A statement issued by the Society of Motor Manufacturers and Traders (SMMT) following the first news of the plant’s closure in February read: “Today’s announcement is a huge blow to UK automotive manufacturing, and for the Honda plant’s highly skilled and productive workforce. Whilst production will continue in Swindon until 2021, giving government and industry time to help affected employees and the local supply chain which supports a further 10,000 jobs, this is, nevertheless, devastating news.”

“The challenges facing Honda are not unique,” SMMT chief executive Mike Hawes said. “The global automotive industry is facing fundamental changes: technological, commercial and environmental, as well as escalating trade tensions, and all manufacturers are facing difficult decisions. The UK should be at the forefront of these changes, championing its competitiveness and innovation, rather than having to focus resources on the need to avoid a catastrophic ‘no-deal’ Brexit.”

Honda’s statements have made no mention of Brexit or falling demand for diesel cars – two things that have been recurring in other car makers’ reasoning for problems. 

Honda of the UK Manufacturing director Jason Smith said: “It is with a heavy heart that today we confirm the closure of Honda’s factory in Swindon. We understand the impact this decision has on our associates, suppliers and the wider community. We are committed to continuing to support them throughout the next phases of the consultation process.”

Honda of the UK Manufacturing, which was established in Swindon in 1985, has received a total investment of £1.5 billion across its numerous buildings. It mothballed half of its plant after sales failed to recover following the 2008 financial crisis and then decided to produce just the Civic, with the Jazz and CR-V moving elsewhere in the world.

Back in 2008, Swindon produced more than 230,000 cars annually, but that number has now nearly halved.

Read more

The Swindon factory closure: how Honda got it so wrong

Honda Civic 2019 review

Honda to slash production in Swindon, placing 340 jobs at risk

Honda Accord axed in the UK

Source: Autocar Online

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