Honda has said the challenges of electrification are behind its decision to close its factory in Swindon.
The manufacturer said the move is in response the unprecedented changes in the global automotive industry and solidifies its commitment to electrified cars, rather than a “Brexit-related issue”.
It said: “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.”
Ian Howells, senior vice-president for Honda in Europe, told the BBC the decision to end manufacturing in Swindon was not “a Brexit-related issue”, instead the firm is focusing on the electrification of vehicles to respond to global consumer demand and legislation.
He said: “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.”
According to Christian Stadler, professor of strategic management at Warwick Business School, although Honda’s headline figure said the jobs lost would amount to 3,500, thousands more workers across the supply chain could lose well-paid jobs.
"We have already seen job losses at Jaguar Land Rover and Nissan has scrapped plans to build the new X-Trail at its factory in Sunderland,” he said.
He said despite Honda’s attempts to play down the impact of Brexit, the potential supply chain disruption caused by delays at the border could severely impact the industry’s just-in-time production method.
Stadler also noted that Japan’s new trade deal with the EU will likely see more Japanese companies consolidating the manufacturing process at home, as the UK begins to look like a less attractive place to build cars.
Honda has proposed that the Swindon factory, which produces 150,000 Civics a year, should be closed at the end of the current model’s life cycle in 2021, resulting in a loss of 3,500 jobs.
According to the Society of Motor Manufacturers and Traders, the local supply chain supports a further 10,000 jobs which could potentially be impacted.
Automotive industry leaders such as Nissan, Jaguar Land Rover and Ford have all expressed concern over Brexit in the last month, with the latter warning that a no-deal scenario would be catastrophic for the UK auto industry.
A spokeswoman for CIPS said business leaders have repeatedly warned that non-frictionless borders will result in a rise in costs and delays, with research showing that firms can go out of business with these additional burdens.
She said: “The automotive industry has made great changes to ensure their supply chains are as lean and resilient as possible but raw materials and finished goods in the sector still have to travel across economic lines.
"Depending on the level of impact of all these pressures whether political or economic, every business needs to make difficult and disappointing decisions for what they believe will keep their operations viable.”
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