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Honda closure could cost over 5,000 jobs, global trends as well as Brexit to blame

Tuesday 19 February 2019

DR JONATHAN Owens, Lecturer in Operations Management at the University of Salford Business School, and expert in supply chains, comments on Honda’s announcement that it will close its Swindon car plant. The move will see 3,500 jobs go directly with another 1,500 in the supply chain under threat, according to Dr Owens.

He said that global trends and not just Brexit were to blame for the move, explaining: “The official stance on the decision is that it is based on global trends and not totally on Brexit, as all European market production will consolidate in Japan in 2021.  In some ways this follows a well trodden path by the UK’s other car manufacturers recently in that the motor industry is in the midst of a global shift due to an international economic slowdown exacerbated by trade tensions and, specifically a massive shift away from diesel cars.  

“So how much of this announcement is related to Brexit? Certainly there has to be serious questions raised about the how confused the negotiations have been carried out resulting with high level of uncertainty, of what is known and unknown by many industries, so close to the exit date. Unfortunately there is a no “one-size-fits-all” approach, however the “Just-In-Time” manufacturing and supply chains will almost certainly be hit the hardest, and this could be another consideration for Honda’s decision to exit in 2021. 

“If Honda is seeking to redirect its energies and resources into the Electric Vehicles (EV) it does make sense to focus on the Asia Pacific (APAC) Region. The APAC EV market revenue is seeing a huge growth with the usage of EV’s becoming a new trend in the APAC transportation industry. The higher adoption rates of smart mobility services, government regulations, increasing fuel prices, and growing trend toward adopting non-fossil fuel-based vehicles are supporting the growth of EV’s in this region. In 2017 it as estimated at $30.1 billion, but expected to grow rapidly to $144.6 billion by 2023.  The UK and EU simply has not done this on this scale.

“The eventual tariff-free exports from Japan to the EU are believed to have been a major point this decision and certainly have not helped the UK’s long-term trading position.  The trade agreement signed earlier this month, the remaining 27 states have pledged to reduce tariffs on cars from Japan 10 per cent to zero by 2027, therefore making a Europe-based production facility less attractive.  So why is there any need to stay in the UK?"

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Sam Wood

0161 295 5361