Honda has confirmed that its only European factory, in the English town of Swindon, will close in 2021 with the direct loss of around 3500 jobs.
The Swindon plant, home of Honda UK Manufacturing (HUM), has been operating at around half-capacity for several years. One of its two production lines has been fully shut down for that time, reducing output to 150,000 cars per year. Honda now says that the number isn’t big enough to justify the factory’s existence beyond its current production schedule. Britain’s exit from the EU is not the cause, Honda executives have said.
HUM currently builds the Civic for global markets, but sales of the diesel-dependant model have been hit hard in the wake of the Volkswagen Group-centred dieselgate emissions scandal and the general consumer move to SUVs. Honda is hurriedly trying to accelerate its electric car programme and needs to free-up funds to do so.
Katsushi Inoue, president of Honda Motor Europe said:
“In light of the unprecedented changes that are affecting our industry, it is vital that we accelerate our electrification strategy and restructure our global operations accordingly.
“As a result, we have had to take this difficult decision to consult our workforce on how we might prepare our manufacturing network for the future.
“This has not been taken lightly and we deeply regret how unsettling today’s announcement will be for our people.”
The plant will be joined in closure by the firm’s smaller facility in Turkey, which also makes the Civic, although Honda’s EU headquarters will still be based in the UK.
The EU and Japan recently struck a trade deal that eliminates tariffs on car exports between the two entities. It’s understood that now, with no financial penalties for making cars in Japan and exporting them to Europe, the last business case in favour of maintaining HUM has been removed.
Honda is believed to be restructuring its manufacturing output to locations in markets with significantly higher local demand, like Asia. Chinese new car sales declined in 2018 but still topped 23.8 million, and electric cars are heavily incentivised. Honda has lately been struggling to make inroads into the giant Chinese market with its current range but hopes electric models – like this year’s supermini derived from the Urban EV concept – will change its fortunes.