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Honda announces closure of Swindon plant; "driven by EV transition"

Tue 19 February 2019 | Back to news list

Honda has announced that its Swindon car plant will close in 2021 with the direct loss of about 3,500 jobs. The company said the transition to electric vehicles, which is causing "unprecedented changes" in the industry, is a key factor in the decision. Honda says it intends to accelerate its electrification strategy and will restructure its global operations to deliver that objective.
 
Industry sources suggest that that overall job losses from the closure of the Swindon plant could exceed 7,000. Honda's decision comes shortly after Nissan's announcement that it will not go ahead with plans to build the X-Trail model in the UK (link). 
 
Honda is one of many leading car manufacturers to have adopted an ambitious electrification strategy. The company said in 2016 that it expects two-thirds of its sales to be EVs and plug-in hybrids by 2030.
 
Announcing the decision Katsushi Inoue, Chief Officer for European Regional Operations at Honda Motor Co and President of Honda Motor Europe, said (quoted by Business Green): "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."
 
Some commentators said the decision was also likely to have been related to concerns over Brexit. The fact that the EU has recently struck a trade deal with Japan that will lead to lower tariffs between the two markets has prompted some to speculate that Japanese manufacturers could switch production back to their domestic market, as Honda is doing in this case.
 
A Government statement (from BEIS) said: "The automotive industry is undergoing a rapid transition to new technology. The UK is one of the leaders in the development of these technologies and so it is deeply disappointing that this decision has been taken now."
 
The Government is investing up to £1.5bn in supporting the roll out of zero emission vehicles as part of the Road to Zero strategy, which aims to end the sale of conventional petrol and diesel cars and vans in the UK by 2040. As such, grants are available for EVs, alongside multi-million pound investments that are being made in charging infrastructure and R&D.
 
However, some environmental campaigners have criticised the plans as not ambitious enough, saying that the UK risks seeing its competitive position eroded as other countries pursued faster petrol and diesel phase out dates.
 
Dustin Benton of think tank Green Alliance (on Twitter) said: "I wonder whether the decision to delay the UK's petrol/diesel phase out (and thereby guarantee a large, early EV market, increasing the incentive to put a plant here) will cause similar regret."
 
Labour’s Shadow Business Secretary Rebecca Long Bailey commented: "This is devastating news, first and foremost for Honda employees and their families, but also for the jobs across the supply chain and the impact on the local economy in Swindon. This Government has failed to create an environment of business confidence. The Tories’ austerity programme has failed workers and businesses, and they continue to show a total lack of vision or plans for investment in our future."
 
SMMT Chief Executive Mike Hawes said: "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."
 
In a joint statement, British Chambers of Commerce Director General Dr Adam Marshall, Business West Chief Executive Phil Smith and Thames Valley Chamber of CommerceChief Executive Paul Britton said: "The automotive industry is a bellwether for UK manufacturing, and has a disproportionate impact on many of our business communities and on our export strength. The planned closure of the Swindon plant will have a major impact across the area, affecting not only many employees on site but also firms and staff across the supply chain."


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