Honda to close British car plant as Brexit looms
* Factory closure due to market changes not Brexit - CEO
* Latest example of Japanese firm pulling out of Britain
* Britain due to leave the EU in 38 days
* Honda to also stop making Civics in Turkey
(Adds detail on electric car supply and demand)
By Costas Pitas and Naomi Tajitsu
LONDON/TOKYO Feb 19 (Reuters) - Honda will close
its only British car plant in 2021 with the loss of up to 3,500
jobs, a major departure of Japanese investment announced just
over a month before the United Kingdom is due to leave the
The automaker, which builds more than a tenth of the 1.5
million cars made in Britain, said the move was not related to
Brexit and it needed to focus activities in regions where it
expects to sell most cars, after struggling in Europe.
But the timing of the announcement about the Swindon plant,
just 38 days before Brexit, comes after a series of warnings
from Japan that it would pull investments if they are no longer
economically viable after Britain leaves the bloc.
"We had to consider the rise of electrified vehicles, and
the different speeds at which electric vehicles will be taken up
in North America and Europe," said Honda Chief Executive
Takahiro Hachigo. "This decision was not informed by Brexit."
Honda, which builds its Civic in Britain and Turkey, said it
would stop making the model in both countries. The announcement
comes just over two weeks after fellow Japanese carmaker Nissan
reversed a decision to build a new SUV in Britain.
Most of the Civic hatchbacks built in Britain are for export
to the United States rather than Europe. Europe's expected
faster take-up of electric vehicles could be supplied from China
and Japan, where Honda already plans to produce at scale.
Britain's business minister said Honda's decision was a
major blow and illustrated how much was at risk from Brexit.
"Decisions like Honda's this morning demonstrate starkly how
much is at stake," said Greg Clark, who supports a Brexit deal
agreed between the UK government and EU, but which has so far
failed to win over a majority of British lawmakers.
"This news comes on top of months of uncertainty that ...
manufacturers have had to endure about Brexit, about our future
relationship with the EU," Clark said.
He said it was unacceptable that business did not have
clarity on future trading terms ahead of the March 29 departure.
Honda, Britain's fourth-biggest automaker, will cease
production at Swindon in southern England, which made 160,000
cars in 2018.
It follows decisions by Japanese electronics companies Sony
and Panasonic to move their headquarters from
Britain into the EU, while Hitachi put a $28 billion
nuclear power project in Britain on hold in January.
Some 1,000 Japanese firms are based in Britain, employing
around 140,000 people, and have invested about 60 billion pounds
($78 billion), according to the Japanese embassy in London.
Nissan, Toyota and Honda were encouraged to come to
Britain in the 1980s as a pro-business gateway to the EU and
have helped turn around an ailing domestic car industry.
The trio build half of Britain's cars and hundreds of
thousands of engines at production sites across the country, but
a no-deal Brexit could destroy the free and unfettered trade
manufacturers rely on.
The loss of such a major employer in Swindon, which backed
Brexit in the June 2016 referendum, risks a further 10,000 jobs
in the supply chain, which could have knock-on effects for other
carmakers due to the interconnected nature of the sector.
For Honda, declining demand for diesel vehicles and tougher
emissions regulations have also clouded its manufacturing
prospects in Europe, which accounts for just 3 percent of its
The company said in October 2017 it would stop making
vehicles at its Sayama plant in Japan by 2022 as it grapples
with a shrinking domestic market, while it has a tiny share of
less than 1 percent in Europe.
The outlook in Europe looks gloomy as sales in every major
country fell in January, according to industry data, with a
double-digit drop expected in Britain, Europe's second-biggest
auto market, if there is a disorderly Brexit.
U.S. automaker General Motors has already pulled out
of the continent while Ford is conducting a major
A recently agreed EU-Japan trade deal also means tariffs on
cars from Japan to the bloc will be eliminated, while Britain is
struggling to make progress on talks over post-Brexit trade
relations with Tokyo.
Honda said this was not part of the decision-making process
but its boss said it would benefit from the EU-Japan deal.
Britain's largest trade union Unite said it would continue
to consult with the company and fight to keep the site open,
blaming the handling of Brexit for making it harder for
companies to keep investing in the country.
"We believe that the uncertainty that the ... government has
created by its inept and rigid handling of the Brexit
negotiations lurks in the background," said national officer for
the automotive sector Des Quinn.
($1 = 0.7741 pounds)
(Writing by Costas Pitas in London; additional reporting by
Chang Ran-Kim in Tokyo and Guy Faulconbridge, Alistair Smout,
David Milliken and Kate Holton in London; Editing by Mark Potter
and David Holmes)
First Published: 2019-02-19 08:54:16
Updated 2019-02-19 18:36:01
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