The Japanese carmaker’s decision to shut its Swindon factory is part of a pattern in which Brexit uncertainties play a significant role
First, the uncontroversial bit. Honda’s decision to close its factory at Swindon is a body blow to the west of England economy, to the British car industry, and to the UK manufacturing sector more widely. It will not be easy for the Wiltshire town to absorb the massive hit. Now, the more controversial part. The Japanese carmaker’s decision reflects several factors. These include a Europe-wide market shift from diesel to electric cars. But it unquestionably also reflects continuing uncertainty about Brexit’s impact on the UK economy and the fear of a no-deal exit from the EU – and anyone who pretends otherwise is simply not telling the truth.
Honda has been in Swindon since 1989. It came because the UK went to great lengths to persuade the car giant that Swindon was the right site to supply the European Union market, of which Margaret Thatcher’s Britain was a keen advocate. Output has declined since the financial crisis, leaving only one model, the Civic, in production at a factory that used to produce three. Nevertheless, until now, Honda has not closed a vehicle factory in its 70-year history anywhere in the world. It has also tried hard to keep Swindon open, even though production of 160,000 vehicles a year there is “sub-scale” when compared with the output of 2m in China and the US. Now Swindon is to close in 2021, leaving 3,500 Honda workers out of work, along with at least that number in the supply chain and associated businesses.
Announcing the closure on Tuesday, Honda said Brexit was not taken into account. “This is not a Brexit-related issue for us,” said its senior vice-president for Europe, Ian Howells. The company is being too polite. In the past, Honda has been keen to warn against the consequences of a disorderly Brexit. If Britain were to leave the EU customs union, the company said last summer, border checks could clog up the company’s waste-averse supply chain. The breadth of the Brexit challenge was “unprecedented in terms of its total impact”, said the same Mr Howells. That challenge has not changed, and is now potentially more acute as the prospect of no-deal deepens.
It would be wrong to argue that Honda’s decision is solely about Brexit. The global market for cars is restructuring in response to threats to the ecosystem caused by harmful car emissions. But it is equally wrong to pretend that it has nothing to do with Brexit either. By leaving the EU, Britain is reneging on the access to the European market it originally offered to Honda; Honda is therefore bound to think again. In a European car market that, like markets elsewhere, survives on high-volume, just-in-time production, Brexit removes the Swindon plant from the arena without compensating gains. With tariffs between the EU and Japan now ending, and Brexit likely to raise the cost of parts and reduce access to the EU, Britain’s decision leaves Honda with few real options.
Honda’s decision in Swindon is also part of a pattern. Nissan is scaling back its plans for Sunderland. Toyota may leave Burnaston. Likewise BMW in Cowley. The business secretary, Greg Clark, maintains a calm veneer about Honda, but his words – “devastating”, “dismay” – convey something close to panic at the existential threat facing parts of British industry. Nor is the mood confined to multinationals: the farmers’ union president talked in similar terms – “catastrophe”, “nightmares” – on Tuesday too. The reaction of doctrinaire Brexiters, meanwhile, is shameless. “Nothing to do with Brexit whatsoever,” says the chair of Leave Means Leave. Oh, but it is. It really is. Leaving the single market and the customs union is their mess. Even now, they must be stopped.