Alice Milton, BA World Philosophies
On Tuesday 19 February, the Japanese car company Honda announced it will be closing its plant in Swindon by 2021. This will result in the direct loss of at least 3,500 jobs in the area and in the wider supply chain. It also represents a significant blow to the UK economy. Honda’s bosses are saying that Brexit is not to blame for the move.
Honda’s bosses are saying that Brexit is not to blame for the move.
There is a global decline in the demand for diesel cars due to high levels of emissions, especially in large European cities. Since the Volkswagen scandal of 2015, the industry has seen a move towards electric vehicles instead. Many car companies are also following Tesla by starting production of autonomous cars. According to Honda, their Swindon plant lacks the space needed for these changes. This and the fact that the plant only produced 161,000 of the 5.3 million Honda cars last year, suggests this may be a logical move.
But many believe that Brexit must have been a factor in Honda’s decision. If anything, their comments back in 2016 with regards to the UK referendum prove this. In 2016, Honda Executive Vice President Seiji Kuraishi said the Japanese automaker had “no intention” of withdrawing from the UK. However, this was before a no-deal Brexit had even been considered. The company’s use of the ‘just-in-time’ method of production relies heavily on the easy movement of goods between the UK and the continent. Currently, more than half of the parts used to make a Honda Civic travel to Swindon via the Eurotunnel. This is not unique to Honda. 25% of trade between the UK and the rest of Europe goes through the Eurotunnel. If new tariffs and checks have to be implemented at Calais and Dover, production efficiency will be massively impacted.
Honda may claim Brexit is not the reason for the closure of the plant, but it would be surprising if they had not considered the possible consequences of staying in the UK after Brexit. Honda’s announcement of the move comes only a few weeks after the implementation of a new Japan-EU trade deal. This lucrative deal is one the UK is likely to miss out on after 29 March when it leaves the EU.
Japan’s car companies arrived in the UK in the 1980s, hoping that the UK would be a springboard into the European common market. Now, with uncertainty on the horizon, Honda could mark the beginning of a general move out of the UK for big businesses. Nissan has stated it will not be making its new X-Trail in Sunderland, despite being offered £61 million pounds by the UK government. The Japanese businesses who leave the UK will undoubtedly recover from the move. However, the workers in Swindon and in other parts of the UK are having to look for new jobs. If the Honda move is a consequence of Brexit, it could signal an increasing number of businesses backing out of the UK. The British government needs to be prepared for the massive job losses that could follow.
Photo Credits: Brian Robert Marshall, Wikimedia Commons