Honda confirms it's closing its only British car plant as Brexit looms

LONDON — Honda confirmed reports that it will close its only British car plant in 2021 with the loss of up to 3,500 jobs, a major departure of Japanese investment a month before the United Kingdom is due to leave the European Union.

The Japanese firm, which builds a tenth of Britain's 1.5 million cars at its Swindon plant, said the move was not related to Brexit and that it needed to focus its activity in regions where it expects to sell most cars, after struggling in Europe.

But the timing of the announcement, just 38 days before Brexit, comes amid deepening Japanese corporate worries about investing in Britain after it leaves the EU.

"This decision was not informed by Brexit," said Honda Chief Executive Takahiro Hachigo.

"We had to consider the rise of electrified vehicles, and the different speeds at which electric vehicles will be taken up in North America and Europe."

Honda said it will stop building the Civic in both Britain and Turkey. The Swindon plant builds the Civic Hatchback and Type R. The announcement comes just over two weeks after fellow Japanese carmaker Nissan reversed its decision to build a new SUV in Britain.

Honda, Britain's fourth biggest automaker, will cease production at its Swindon plant, which made 160,000 cars in southern England in 2018. Honda has not announced where that production will go. Civic modes are also built in Indiana, Ontario, and several other locations around the globe.

It follows decisions by Japanese electronics companies Sony and Panasonic to move their headquarters from Britain into the EU, while Hitachi put a $28 billion nuclear power project in Britain on hold in January.

'Devastating decision'

Some 1,000 Japanese firms have locations in Britain, employing around 140,000 people, and have invested about 60 billion pounds ($78 billion), according to the Japanese embassy in London.

Nissan, Toyota and Honda were encouraged to come to Britain in the 1980s as a pro-business gateway to the EU and have helped turn around a domestic car industry that had been decimated.

The trio currently build half of Britain's cars and hundreds of thousands of engines at production sites across the country.

"This is a devastating decision for Swindon and the UK," said business minister Greg Clark.

The United Kingdom must urgently end the uncertainty over its exit from the European Union so that businesses can have clarity about the future, Clark said. "Decisions like Honda's this morning demonstrate starkly how much is at stake.

"This news comes on top of months of uncertainty that you as manufacturers have had to endure about Brexit, about our future relationship with the EU," Clark told a manufacturing conference.

"A situation in which our manufacturers do not have the certainty they need about the terms under which two thirds of our trade will be conducted in 40 days time is unacceptable — it needs to be brought to conclusion and without further delay."

Brexit 'lurks in the background'

For Honda, declining demand for diesel vehicles and tougher emissions regulations have also clouded its manufacturing prospects. The company said in October 2017 it would stop making vehicles at its Sayama plant in Japan by 2022 as it grapples with a shrinking domestic market.

Like many of its global rivals, Honda is trying to streamline its operations as it invests heavily to develop electric vehicles and self-driving cars.

The recently agreed EU-Japan trade agreement means tariffs on cars from Japan to the bloc will be eliminated, while Britain is struggling to make progress on talks over post-Brexit trade relations with Tokyo.

Honda said that was not part of the decision-making process, but the firm's boss said it would benefit from the EU-Japan deal.

Britain's largest trade union Unite said it would continue to consult with the company and fight to keep the site open.

"We will leave no stone unturned to keep this plant going and its workforce in employment," said national officer for the automotive sector Des Quinn.

"We believe that the uncertainty that the ... government has created by its inept and rigid handling of the Brexit negotiations lurks in the background."