Honda’s exit leaves void in British auto industry
Potentially bleak future awaits several UK plants as carmakers find reverse
Honda Motor’s decision to end carmaking in Britain casts a pall over the future of the UK auto industry after it recovered from near extinction just a few decades ago to become one of Europe’s top producers.
The closure of Honda’s Swindon plant in 2021 - blamed on “unprecedented” global changes - will end a manufacturing history that began in 1989 and lead to the loss of 3,500 jobs.
That will be the biggest drop in output and employment since Rover Group folded in 2005, eliminating more than 6,000 positions. The ramifications of the latest shutdown may be greater still.
While Rover’s demise marked the death of home-grown volume car production after years of contraction, Honda’s plan to quit Britain removes a major component of the Japanese manufacturing influx that filled the void to make the country Europe’s third-biggest carmaker as recently as 2016.
Nissan Motor had already dealt a blow with the announcement earlier this month that it no longer plans to build the X-Trail sport-utility vehicle at a plant in Sunderland, northern England, that accounts for almost one-third of total UK car production and employs more than 7,000 people.
Throw in the Honda decision and what initially looked like a restructuring - as manufacturers adjusted to Brexit, lower diesel demand and a dip in sales in some European markets - is growing into a full-on crisis, according to David Bailey, professor of industrial strategy at Aston Business School.
“We’re not yet back to the situation we faced before the Japanese came in, but there is a risk that that may be the case,” Bailey said.
Among other plants facing a potentially bleak future are JLR’s Castle Bromwich site, the Ellesmere Port plant, and Ford’s factories in Bridgend, Wales, and Dagenham, near London, he said.
Honda most likely reached its decision because it doesn’t view Britain as an optimum location for developing a coming generation of electric autos, Bailey said.
The UK industry has already been battling a Brexit-related sales slowdown, potential tariffs and supply bottlenecks ahead of the split from the European Union on March 29th, with politicians yet to reach an agreement that would avert a no-deal departure.
Britain’s auto output slipped behind France in 2017. Were all the sites currently regarded as at risk to close, the extended slump would see volume fall below the likes of the Czech Republic and Slovakia.
The decline of mass manufacturing in the UK stemmed largely from a loss of market share to Japanese carmakers from the 1960s onwards, with heavily unionised British firms unable to match their Asian rivals in productivity, price and reliability.
Struggling brands were brought together as British Leyland, which was nationalised in 1968 and renamed Rover before being sold to BMW and gradually broken up.
Rover’s former Longbridge factory limped on as a manufacturer of MG-brand sports cars under Chinese ownership before ceasing production in 2016. The UK has been a hub for Japanese auto production in Europe since the Sunderland plant opened in the mid-1980s, with Nissan, Honda and Toyota owning three of the country’s six largest carmaking factories.
As the political impasse over Brexit drags on, automotive-industry investments in Britain have slumped. They almost halved last year to £589 million pounds (€676 million), the lowest since the global financial crisis, according to the Society of Motor Vehicle Manufacturers and Traders (SMMT).
The impact on UK employment goes far beyond plant closures, with Honda’s Swindon site alone sustaining around 10,000 jobs in the local supply chain, the SMMT estimates, and many more posts in the wider economy. – Bloomberg