Honda to close its Swindon factory in UK in 2021
Japanese car maker, Honda, is going to close its car plant in Swindon (UK) in 2021. 3.500 people are likely to lose their job. Honda says the decision to close its only European factory is driven by a slow-down of its European business, rather than the uncertainties of Brexit.
President Takahiro Hachigo confirmed the speculations in the British press at a press conference in Tokyo on Tuesday morning. He emphasized Brexit is not the reason for the closure as such.
HQ and Formula 1 team to stay
Honda will keep its European headquarters in the UK, and its Formula 1 team. The Honda plant in Swindon in the south-west of the UK produces some 150.000 cars a year, among which the popular Civic. This is roughly 10% of Great Britain’s total car production.
The Japanese car maker started with producing engines in Swindon in 1989, extending to complete cars in 1992. To cope with the effects of an eventual ‘hard Brexit’ at March 29th, Honda announced earlier it would stop production for 6 days in April.
The announcement of the closure of the Swindon factory comes as a second blow. Beginning this month Nissan decided to cancel its plans to produce the next generation XTrail in its Sunderland factory. The car will be made in the Kyushu plant in Japan instead.
“We took this decision on financial and economic grounds”, said Gianlucca de Ficchy, president of Nissan Europe. “But the uncertainty of the future relations between the UK and the EU is not very helpful for companies like ours to plan the future.”
Toyota warns government
Japan’s biggest car manufacturer, Toyota, declared earlier this month it won’t change its operations in the UK. It warned the British government, however, that a ‘hard Brexit’ would force it to ‘halt production’ in its factory in Derbyshire.
To produce the cars in the UK, it needs parts that are made in continental Europe. Confusion at the borders with massive traffic jams at ports like Dover are expected. 17% of British trade passes here and every day 7.000 trucks cross the Channel.
Free EU trade agreement
Apart from the uncertainty of Brexit, the shift in the Japanese car manufacturers’ strategy is probably also due to the free trade agreement with the European Union.
In July 2018, the EU and Japan signed a new free trade agreement that took effect this month. The deal opens both markets to one another with reduced taxes. The 10% taxes on imported Japanese cars and 3% on parts will disappear over a time span of seven years.
The latter makes it less stringent for Japanese car makers to have the cars produced in Europe itself. The other car manufacturers fear Japan might flood the EU car market with cheaper cars in the coming years.