Honda could be axing its UK car factory in 2022

[Pebb]

Source: Top Gear

More car industry casualties of Brexit in waiting? Sources say Honda is set to announce the closure of its factory in Swindon, UK. Such a move would put 3,500 on-site jobs ‘at risk’, plus thousands more in the factory’s nationwide supply chain.

The Swindon factory, which produces the Civic hatchback – including the 316bhp Type R – is Honda’s only car production plant in the EU. It’s already announced a six-day shutdown in April 2019 to assess disruption in relation to Britain’s impending exit from the EU on March 29, but a decision to close the factory entirely would come as a shock move.

Claims suggest Honda will maintain its company headquarters in Bracknell even if the Swindon plant is axed.

Honda has not yet officially commented on the reports, which first surfaced on Sky News on Monday February 18th. Currently, the factory produces more than 100,000 cars per year, the vast majority of which are exported.

 

[lancia delta hf]

Of course, it has to be brexits fault. How about TVR being forced to delay production of their new car because the eu forcing them to advertise vacancies across Europe for workers they want locally. Cant wait until the eu crashes and burns, which it will, whilst Britain will flourish.

 

[Scaff]

Of course, it has to be brexits fault.

How is it not?

A move of production to Japan is only commercially viable under the new trade deal if the UK has left the EU and has no tariff free access to the EU. If the UK remained in the EU then production in the UK would still be cheaper than from Japan even with the FTA in place.

This is clearly a Brexit based move, and one that Honda warned repeatedly (as did the UK Motor Industry as a whole) was a possible outcome.

 

[MatskiMonk]

Of course, it has to be brexits fault. How about TVR being forced to delay production of their new car because the eu forcing them to advertise vacancies across Europe for workers they want locally. Cant wait until the eu crashes and burns, which it will, whilst Britain will flourish.

I'm no expert on this, but reading a number of sources.... it seems that; Blaenau Gwent has received £4bn in EU funding over the years, and Wales is a net benefactor from the EU. When accepting a loan AND investment from the Welsh government (as part of the Tech Valleys project to help regenerate the area) TVR accepted the rules surrounding state ownership of companies, which include - in this case - having to tender out to the EU for work to develop the site of the factory. Had they not accepted this deal, they would not have had to include EU tenders for the site development. It seems, as the car wasn't ready when this was announced anyway, they accepted these terms and took the money. The ongoing production jobs at the factory were entirely up to TVR, and therefore the boost for the local economy in the short, medium and long term, were/was nothing to do with EU stipulation... and of course, I'm sure they were still free to go with a local tender if they wished -- though I haven't looked into that.

 

[AudiMan2011]

Welp. It's official now.
https://www.bbc.co.uk/news/business-47287386

 

[Touring Mars]

How is it not?

A move of production to Japan is only commercially viable under the new trade deal if the UK has left the EU and has no tariff free access to the EU. If the UK remained in the EU then production in the UK would still be cheaper than from Japan even with the FTA in place.

This is clearly a Brexit based move, and one that Honda warned repeatedly (as did the UK Motor Industry as a whole) was a possible outcome.

Uncertainty over Brexit and the recent scrapping of tariffs thanks to new EU-Japan trade deal are most likely contributory factors, but Honda themselves do not cite either as 'the reason' for the plant's forthcoming closure.

Honda have said that the main reasons for the decision to close the Swindon plant are that they plan to consolidate production in Japan and that they are moving towards electric/hybrid vehicles in general - the new Civic model (which might have been built in Swindon) will now be a hybrid car that they wish to build in Japan instead. But, ironically, the EU-Japan trade deal has made every Japanese car plant in Europe less viable, since the whole point of investing in plants in Europe was to minimise their exposure to EU tariffs - but now that they have been scrapped, there's no need to do that any more.

 

[Scaff]

Uncertainty over Brexit and the recent scrapping of tariffs thanks to new EU-Japan trade deal are most likely contributory factors, but Honda themselves do not cite either as 'the reason' for the plant's forthcoming closure.

Honda have said that the main reasons for the decision to close the Swindon plant are that they plan to consolidate production in Japan and that they are moving towards electric/hybrid vehicles in general - the new Civic model (which might have been built in Swindon) will now be a hybrid car that they wish to build in Japan instead. But, ironically, the EU-Japan trade deal has made every Japanese car plant in Europe less viable, since the whole point of investing in plants in Europe was to minimise their exposure to EU tariffs - but now that they have been scrapped, there's no need to do that any more.

Honda have repeatedly gone on the record saying that should we end up in a no-deal situation (or be heading in that direction) they would pull production from the UK; the plant itself has undergone many changes in terms of production lines, model types, etc. A move to hybrid alone would not be enough to drive this alone (despite my MP attempting to claim just that).

Brexit is a significant factor in this, as it was in numerous other plant and production line decisions taken in the UK motor industry in recent months.

 

[Touring Mars]

Honda have repeatedly gone on the record saying that should we end up in a no-deal situation (or be heading in that direction) they would pull production from the UK

I haven't seen a single statement from Honda to that effect. The Japanese government have warned the UK that Japanese firms will have to consider their position in the event that the UK doesn't secure a good deal with the EU.... but whose fault is that?

Brexit is a significant factor in this, as it was in numerous other plant and production line decisions taken in the UK motor industry in recent months.

Contrary to what you have just claimed, Honda themselves have stated that Brexit is not the reason for this decision - of course it is a factor, but the point remains that the Swindon plant would be facing closure even if we had voted to remain in 2016. A far more signficant reason is that Japan has signed massive trade deals that make consolidating their manufacturing business in Japan much more viable, notably the EU-Japan EPA and the CPTPP, which taken together make such a move a no-brainer, while also removing the key rationale behind making new investments in plants in Europe.

 

[Scaff]

I haven't seen a single statement from Honda to that effect. The Japanese government have warned the UK that Japanese firms will have to consider their position in the event that the UK doesn't secure a good deal with the EU....

I've just edited in one source for you, and its not as if this is a 'new' warning from the industry as a whole. https://www.gtplanet.net/forum/thre...-to-leave-the-eu.342130/page-89#post-12387161

but whose fault is that?

It seems in your mind the EU, in every single situation imaginable.

Contrary to what you have just claimed, Honda themselves have stated that Brexit is not the reason for this decision - of course it is a factor, but the point remains that the Swindon plant would be facing closure even if we had voted to remain in 2016. A far more signficant reason is that Japan has signed massive trade deals that make consolidating their manufacturing business in Japan much more viable, notably the EU-Japan EPA and the CPTPP, which taken together make such a move a no-brainer, while also removing the key rationale behind making new investments in plants in Europe.

May have faced closure, and no I don't take Honda's press release at face value.

Nor is it a no brainer, unless transport costs to the EU have suddenly become cost neutral.

However I get the pattern, Its not Brexit and even if it is then its the EU fault.

 

[Touring Mars]

I've just edited in one source for you, and its not as if this is a 'new' warning from the industry as a whole. https://www.gtplanet.net/forum/thre...-to-leave-the-eu.342130/page-89#post-12387161

HONDA and other Japanese firms will pull out of Britain if the Government fails to secure free access to the EU market, according to the country’s ambassador.

... which is not a statement by Honda.

It seems in your mind the EU, in every single situation imaginable.

It is the fault of both the UK government and the EU, but it is now painfully obvious that the EU will not offer the UK the opportunity to leave with a deal that is acceptable to the UK.

 

[Scaff]

... which is not a statement by Honda.

I'm quite sure Honda wasn't included in the wording at all when the ambassador spoke on their behalf

It is the fault of both the UK government and the EU, but it is now painfully obvious that the EU will not offer the UK the opportunity to leave with a deal that is acceptable to the UK.

And as I've said numerous times before that's not the EU's job. Its job is to secure the best deal for the remaining members, the UK's job is to secure the best deal for the UK. I do however find it interesting that straight after sharing the blame you then move straight back to blaming the EU.

 

[MatskiMonk]

As was pointed out at the point of the referendum, longer term investment was always going to be in jeopardy with a vote to leave. I'd accept that other things are in play here, rather than Brexit, but I think it's another case where it is a contributing factor... if simply because the uncertainty around the effects of it leave you with unanswerable questions that you really want to be able to answer when deciding whether to invest (potentially) billions or not.

I would also say, neither Honda or the Japanese are going to come out and say it, even if it was because of Brexit because I'm sure they don't want to risk the negative PR effects on UK domestic sales.

Anyway...

From SMMT...

With JLR moving a chunk of production to Slovakia, the Japanese manufacturers represent a big chunk of the remaining volume and this could be a sign of worse to come. I personally don't think BMW will take their operations out of the country without more significant reasons... but it's not looking good for UK car manufacturing.

 

[Tornado]

Isn't there a Brexit thread where you two were already arguing over this?

 

[Liquid]

Any departure of manufacturing or closures in the UK are going to have a Brexit effect. It bypasses Godwin's law and has an immediate probability of 1.

This one just happens to overlap with a car story.

 

[Tornado]

Certainly, just like the discussions about Ford and GM's product portfolio and manufacturing locations invariably are related to the silly trade wars Trump keeps threatening/starting; but based on the tone of the conversation and how personal it has become it doesn't seem like it really mattered what the topic was for the argument to have spilled over here.

 

[Carbon_6]

This explains the Swindon situation quite nicely.

https://www.topgear.com/car-news/insider/why-hondas-swindon-closure-isnt-simply-down-brexit

 

[Scaff]

Interesting stat in regard to the claim that falling diesel sales were a major factor in this, the Civic's produced at Swindon had a max 12% mix of diesel models.

https://www.thepoke.co.uk/2019/02/2...MIECjACCyVRk1io_JdIabbuQ_ADgPbeEWkcwlarrbE60Y

Autocar are also not on board with the 'Brexit isn't a factor line'.

"Is Brexit uncertainty a factor? Almost certainly."

https://www.autocar.co.uk/opinion/industry/opinion-why-honda-shutting-its-swindon-factory

And an earlier piece by Autocar

https://www.autocar.co.uk/opinion/i...-uk-automotive-whatever-your-political-stance

 

[Scaff]

Fanciful to say Brexit wasn't a factor

https://www.theguardian.com/politic...-brexit-when-closing-swindon-sir-david-warren

 

[Touring Mars]

Fanciful to say Brexit wasn't a factor

https://www.theguardian.com/politic...-brexit-when-closing-swindon-sir-david-warren

Is anyone saying anything different?

The fact is, however, that Brexit is not the main reason (or even one of the main reasons) for Honda pulling out of the UK - the EU-Japan trade deal, however, definitely is... ironic, given that the UK may still not even leave the EU and yet something tells me Honda would still have pulled out of the UK even if that were the case.

 

[Scaff]

Is anyone saying anything different?

The fact is, however, that Brexit is not the main reason (or even one of the main reasons) for Honda pulling out of the UK - the EU-Japan trade deal, however, definitely is... ironic, given that the UK may still not even leave the EU and yet something tells me Honda would still have pulled out of the UK even if that were the case.

My two local MPs

And I and many others in the industry disagree that's its not one of the main reasons.

 

[Touring Mars]

My two local MPs

And I and many others in the industry disagree that's its not one of the main reasons.

Well, no-one here is disagreeing with the assertion that Brexit is likely a contributory factor - but Honda are also closing their plant in Turkey (furthermore, it is not planning to relocate any of these jobs to inside the EU), which undermines the view that Brexit is a major factor in Honda's decision to close its Swindon operation.

 

[Scaff]

Well, no-one here is disagreeing with the assertion that Brexit is likely a contributory factor - but Honda are also closing their plant in Turkey (furthermore, it is not planning to relocate any of these jobs to inside the EU), which undermines the view that Brexit is a major factor in Honda's decision to close its Swindon operation.

If it makes you feel better......

However. The Turkey plant gets tariff free parts from the EU supply chain (and in the main Swindon), with Swindon closing that's gone, so the two are directly liked and not just because of Honda's desire to relocate production to Japan (which interesting doesn't include any other production plants in any other country or the logistics store and bike component plant in Belgium). Turkey doesn't get tariff free car sales access to the EU or 3rd sector countries (10% for the EU, but it made the Civic Saloon).

It also doesn't now need to relocate these jobs in the EU due t the FTA that we (the UK) will no longer be a part of. Had we stayed in the EU this may very well have been a different story, as even with tariff free access, shipping complete vehicles from Japan to the EU is not without cost (something that has never been needed with the UK in the EU).

Other arguments include that Honda sales are down, which is true, but even with that the Civic remains Honda's biggest seller and the CR-V (also made in Swindon) has actually seen a rise in sales. Then we have the diesel argument, which quite frankly is the weakest one of the lot, given that Honda's mix has always been light on diesel, and Civics from Swindon have never exceeded around 12% diesels in the sales mix.


Over the course of this week I've spoken with people I know at BMW, VWG, TGB, a range of dealer groups and 3rd party industry suppliers and all (without exception) see Brexit as one of the key factors in this, with most seeing Honda as being dishonest in its approach to this. I've also spoken to around a dozen people who work at either the Swindon plant or Honda's EU HQ and the view is the exact same their as well.

But, you know what the **** would any of us know, its only the industry we work in and know, and between the people I've spoken to have many hundreds of years experience in.

 

[Tornado]

Interesting that it went from "Honda have repeatedly gone on the record of saying" to "some people I've talked to think."

 

[Scaff]

Interesting that it went from "Honda have repeatedly gone on the record of saying" to "some people I've talked to think."

Nope, but nice try (and way to ignore the rest of the post).

Would you also like the times they said it would cause them to halt production at the point of Brexit and also potentially cost them tens of millions?

 

[Touring Mars]

Apologies @Scaff, I'm just going on what I have read and researched on the subject, but I know that there is more to it than what I am privy to, and that you are much better placed to comment on this than the sources I rely on. My arguments make some sense to me, but the fact is that I'm not directly involved with people who really know what is going on in this case... and you are. Ultimately though, we are both on the same side and I don't wish to give you the impression that we're not.

 

[Eunos_Cosmo]

It would probably be an unnecessary (from Honda's perspective) marketing risk to directly cite Brexit as a reason for shutting down the Swindon plant. Does Honda really want to face backlash from ~half* of the UK for very little gain other than the slight pleasure of "I told you so"?

I get the sense that this was very much a Brexit-related decision, but not one worth being vocal about.

 

[homeforsummer]

It would probably be an unnecessary (from Honda's perspective) marketing risk to directly cite Brexit as a reason for shutting down the Swindon plant. Does Honda really want to face backlash from ~half* of the UK for very little gain other than the slight pleasure of "I told you so"?

I get the sense that this was very much a Brexit-related decision, but not one worth being vocal about.

That seems to be the gist on Twitter. People are already annoyed at Honda for pulling out, so it makes little sense to stir the pot further and risk losing potentially half your customers.

 

[Scaff]

A friend forwarded this to be last night, its Honda's written evidence to the UK government on how Brexit, in particular a no-deal and WTO may effect it and its options.

http://data.parliament.uk/WrittenEvidence/CommitteeEvidence.svc/EvidenceDocument/Business, Energy and Industrial Strategy/Leaving the EU implications for the automotive industry/written/71644.html?fbclid=IwAR3GLxkBPtB52ObJAPav2h9q9u9doJENJeCtz32fDeJ1XENL_OYVi7rTcEU

The short version of it is, 'we want to up EV share in Europe, but we can only do that with a factory inside the EU. Keep that and Swindon gets investment and a future, don't and its screwed. Oh and if we have to shut Swindon then Turkey's gone too as it needs tariff free parts from Swindon'.

 

[Touring Mars]

The short version of it is, 'we want to up EV share in Europe, but we can only do that with a factory inside the EU. Keep that and Swindon gets investment and a future, don't and its screwed. Oh and if we have to shut Swindon then Turkey's gone too as it needs tariff free parts from Swindon'.

It doesn't actually say that - it says that they need a 'meaningful transition' period to allow them time to adjust to the UK being outside of the Single Market. This is actually what Theresa May has negotiated, and a transition period remains a likely outcome (and is the agreed position of both the UK and the EU)...

It seems rather bizarre, then, that the decision to close Swindon (and hence also the plant in Turkey) has been taken before the outcome of the first phase of Brexit (e.g. the Withdrawal Agreement) has even been concluded, even though it does look likely that a No Deal outcome may now happen, and that the 'meaningful transition' that Honda say they require might not happen.

IIRC, Honda had already announced to suspend activities in Swindon during April in response to the uncertainty over whether No Deal (and thus no transition period) might occur, but it seems that they have now assumed that No Deal is certain to happen.

With a bit of luck, they may change their minds if the UK and the EU shock us all and come to a reasonable compromise that allows the transition period to come about.

 

[Scaff]

It doesn't actually say that - it says that they need a 'meaningful transition' period to allow them time to adjust to the UK being outside of the Single Market. This is actually what Theresa May has negotiated, and a transition period remains a likely outcome (and is the agreed position of both the UK and the EU)...

Which it also says need to have been done in 2017, and that if it wasn't in place until 2019 t would be far to late.

"Planning for new customs procedures, building the necessary infrastructure and recruiting the new officials needed, must start now, not in 2019."

It seems rather bizarre, then, that the decision to close Swindon (and hence also the plant in Turkey) has been taken before the outcome of the first phase of Brexit (e.g. the Withdrawal Agreement) has even been concluded, even though it does look likely that a No Deal outcome may now happen, and that the 'meaningful transition' that Honda say they require might not happen.

See above Honda's view was in needed to have been in place and done long before 2019.

IIRC, Honda had already announced to suspend activities in Swindon during April in response to the uncertainty over whether No Deal (and thus no transition period) might occur, but it seems that they have now assumed that No Deal is certain to happen.

Which is what most OEM's in the UK have done either publicly or not. They all work to JiT models and as its a logical step, and something all of them will also factor in when it comes to plant viability in the future (and Ford and Nissan have already been brutally clear on that).

With a bit of luck, they may change their minds if the UK and the EU shock us all and come to a reasonable compromise that allows the transition period to come about.

Having worked for a Japanese OEM I have to say I seriously doubt it.

They don't want to cause others to loose face when it comes to direct blame, but they also will not loose it themselves once a choice of this magnitude has been made.

The piece I quoted above was the UK governments warning and quite frankly if they couldn't read between the lines in that (hell even with my ASD I can manage it) then they really have no hope.

Taken all in its roughly as follows:

Do the following to keep us here, and do it ASAP (i.e. don;t leave it until a month before and still not have it agreed):

• Transitional period to ensure we can keep the place running under JiT
• Early FTA with the EU
• Early FTA with Japan
• Free movement as we need EU27 staff because people from the UK don;t apply and Swindon has stupidly low unemployment
• 3rd Party country status in place to ensure we can still work with the plant in Turkey

How many of these, with around 30 days to go, have the UK managed to secure, agree in parliament and have ready to go for the 29th March?