Honda Shuts Down Operations in Swindon

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Honda – the Japanese car manufacturer has announced the shut down of its operations in Swindon.  Shadow Economy Minister Rhun Ap Iorwerth -Plaid Cymru’s says it will cause at least 3,500 job losses and more down its supply chain.  

The uncertain future trading in the UK is seen as a potential reason the automotive manufacturer is divesting its business from the UK.

Honda says it makes the Civic model from its factory in Swindon of which 90% are dedicated to the EU export market. It says the UK serves as a gateway to the EU market and therefore is not subject to export tariffs. According to a report published by the Common Select Committee on Business, Energy and Industrial Strategy Committee, if the government secure new bilateral trade its unlikely to lead directly to a significant growth  in the UK automotive sector.

However, the failure to do so according to Plaid Cymru reflects a poor business sentiment ahead of Brexit that leaves adverse impact on second and third tier supplier in Wales.

Rhun Ap Iorwerth – Plaid Cymru’s Shadow Economy Minister.

“We have 18 companies in the Wales that are direct suppliers to Honda in Swindon. Those suppliers have hundreds of employees and they have their own second and third tier suppliers. This decision will have a wide reaching impact on the component industry in Wales”, says Rhun AP Iorwerth, Plaid Cymru Shadow Minister for Economy and Finance.

He further added, that there is a bit of time before Honda completely shuts its door in Swindon. It will potentially give the manufacturer with the help of the government to find new contracts for suppliers. This is expected to ease the transition of these suppliers to new customers.

Honda has not closed a factory in its almost 70 years of business in any part of the world. The over-reaching concern is, would this pattern would be followed by other major Japanese automotive players in the country?

Professor Peter Wells is the Director of the Centre for Automotive Industry Research of Cardiff University has a different take on this. He says Honda’s business decision should not be perceived solely based on Brexit but to be treated as a business rationalization.

“The big picture when Honda makes decision of this type they are solely not only considering just Brexit, if you look at what happened to their market share in the last 10 years in Europe is halved. That’s a disaster for the company because it means the factory is running well below capacity. So already even before the Brexit issues are considered this is factory that is vulnerable to closure was not able to sell enough cars” says Prof Wells.

According to Honda, it established its Swindon manufacturing facility in 1989 and builds 160,000 civic models annually. 90 percent of its production are exported to the EU and the US market.

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