Honda to close UK and Turkey plants due to challenging landscape
19 February 2019
Honda has announced a major restructuring program, closing its plants in Swindon, UK, and Kocaeli, Turkey.
Both factories produce the carmaker’s Civic model and will close when the current generation bows out in 2021. Honda has said that its Turkish operation, Honda Turkiye A.S., intends to continue its business operations and will hold constructive dialogue with Turkish stakeholders during this period.
The closure of the plant in Swindon, which currently produces 150,000 cars per year, will affect approximately 3,500 people. However, the company will continue to base its European headquarters in the UK, which the company says will allow it to continue ‘focusing on the needs of our European customers.’
In a statement, the Japanese firm says: ‘This proposal comes as Honda accelerates its commitment to electrified cars, in response to the unprecedented changes in the global automotive industry. The significant challenges of electrification will see Honda revise its global manufacturing operations, and focus activity in regions where it expects to have high production volumes.’
With the decline of diesel sales and strict CO2 regulations - with even stricter targets set for 2025 and 2030 - carmakers are being pushed into costly development programs for electric vehicle technology in order to produce more efficient hybrid and electric vehicles.
Katsushi Inoue, Chief Officer for European Regional Operations and President of Honda Motor Europe, said: ‘In light of the unprecedented changes that are affecting our industry, it is vital that we accelerate our electrification strategy and restructure our global operations accordingly. As a result, we have had to take this difficult decision to consult our workforce on how we might prepare our manufacturing network for the future. This has not been taken lightly, and we deeply regret how unsettling today’s announcement will be for our people.’
The closure of the Swindon plant has been widely speculated to be as a result of the uncertainty surrounding Brexit. In November 2017, Honda announced that it would have to pass any potential tariffs from imports and exports, in the event of a no-deal scenario, onto its customers. The news of the closure of operations in Turkey, however, highlights that the Japanese company has decided to restructure in the face of tough trading conditions. Nevertheless, it is likely that Brexit played a small, albeit maybe not crucial, part in the decision to close Swindon.
Speaking to the BBC, Ian Howells, Senior Vice President for Honda in Europe commented: ‘We are seeing unprecedented change in the industry on a global scale. We have to move very swiftly to electrification of our vehicles because of the demand of our customers and legislation. This is not a Brexit-related issue for us; it is being made on the global-related changes I've spoken about.
‘We've always seen Brexit as something we'll get through, but these changes globally are something we will have to respond to. We deeply regret the impact it will have on the Swindon community.’
A new trade deal between the EU and Japan, which will see free trade between the two markets and came into force on 1 February, is also a likely factor in the decision. With electric vehicle technology prominently an Asian stronghold, due to the dominance of battery production in the region, moving production of vehicles closer to these sources will benefit costs.
The news is another blow for the UK, which recently saw Nissan pull investment from its Sunderland plant with the announcement that the next X-Trail model will be built in Japan.