Honda Motor Co. plans to close its automotive plant in western England in 2021, the company said on Tuesday, which was a blow to the British economy when it left the European Union on March 29. The Japanese automaker announced the decision at a press conference in Tokyo, which will likely generate 3,500 or more jobs.
The president and CEO of Honda, Takahiro Hachigo, told reporters that the decision was not related to Brexit, but was based on what made sense for its global competitiveness given the need to accelerate its production of electric vehicles.
“We still do not know what kind of changes Brexit will bring at this stage,” he said. “We have to wait to get a better idea of the situation.” Hachigo said the company will immediately begin talks with workers involved in the Swindon plant.
“I’m very sorry,” he said, adding that “it was the best option in these circumstances.“
Honda manufactures its popular Civic model at the plant, 115 kilometers west of London, with a production of 150,000 cars per year. Its restructuring aims to adapt its operations to increased demand in Asia and North America, Hachigo said.
The next Civic model sold in Britain will be exported from Japan, the company said. Honda is also adapting its operations in Turkey, where it manufactures 38,000 Civic sedans per year. However, he indicated that he would continue to carry out his activities and conduct a “constructive dialogue” with local stakeholders.
British companies are issuing increasingly urgent warnings about the damage caused by the uncertainty surrounding the Brexit. The United Kingdom has not yet sealed an agreement that establishes the conditions for divorce and establishes the applicable commercial rules after Brexit.
During the presentation of the restructuring plan, Hachigo stressed that Honda is trying to adapt to a rapidly changing global industry. “We are facing tougher competition from Chinese and Indian manufacturers,” he said. “We must act faster.”
But Christian Stadler, a professor at the Warwick Business School in England, said that Brexit should be a factor. The loss of the free entrance of Great Britain to the European market from Great Britain annuls one of its main advantages as a manufacturing base.
Many companies fear economic chaos if there is no agreement on the rules and conditions that will replace the 45 years of uncomplicated trade that accompanied the EU membership. The uncertainty has already led many companies to transfer certain operations abroad, store products or postpone their investment decisions. Earlier this month, the Japanese Nissan announced it would not build new SUVs at its Sunderland, England plant, as previously planned. “The automakers have repeatedly warned the government against the Brexit threat to British industry,” Stadler said, noting that Jaguar Land Rover had also reduced its activities.
“Honda faces the same challenges as its Japanese automaker, Nissan. The global economy is slowing down, affecting key markets like the United States and China.”