Honda's decision is a vote of no confidence in Britain’s future

There is a sense that while the Swindon plant’s days were numbered, Brexit tipped the balance

Honda claims Brexit had nothing to do with the decision to shutter its Swindon plant, but almost nobody seems to be buying it.

The consensus among industry pundits is that it suits Honda to avoid dipping its toe into the toxic pool of Brexit.

Even the business minister, Greg Clark, appeared to detect a whiff of Brexit in the decision, saying during the fallout that manufacturers’ no-deal warnings were not “project fear” but “project reality”.

Honda and the wider automotive sector have been vocal in their dismay at the government’s endless shilly-shallying, making it harder to believe the company when it plays Brexit down. Failure to rule out a no-deal exit leaves carmakers facing nightmarish levels of disruption to the crucial just-in-time manufacturing processes that make them tick.

But there are myriad other reasons for Honda to scale back its UK operations and – even more concerningly – for rivals to follow suit.

The backdrop is a global carmaking capacity glut that means some production lines will have to grind to a halt if the supply-and-demand equation is to be balanced.

Another factor is the slump in diesel sales after the dieselgate scandal, a factor which has rendered Jaguar Land Rover’s Castle Bromwich plant vulnerable.

As well as 147,000 Civics a year, Honda makes diesel engines at Swindon for export to a market in precipitous decline. At the same time, even as sales fall, automotive companies must invest their dwindling incomes in electric vehicles to ensure they are ready for the technological leap forward.

Honda in particular has some catching up to do on that front. In its Brexit-free statement, it said its money would be better spent closer to major markets such as China, the US and its home in Japan.

In the case of both Honda and Toyota, which is due to decide on the future of its plant in Burnaston, Derbyshire, next year, the recent free trade deal between Japan and the EU also plays its part. The agreement will reduce tariffs on cars shipped from Japan to the EU to zero by 2027, ending a key benefit for Japanese manufacturers to maintain a European outpost.

There is still a sense, though, that while the writing was already on the wall for Swindon, Brexit underlined it, either hastening Honda’s decision or tipping the balance.

Japanese carmakers came to the UK in the 1980s at the invitation of Margaret Thatcher, who sold the UK as the perfect place to invest billions in return for a launchpad into the single market.

Those familiar with Japanese business say investors would be loth to break such a compact. But their patience is not infinite and warnings from Japan have been growing louder, to no apparent avail.

The UK’s failure to get its house in order means it has simply not held up its end of the bargain, absolving investors – from Japan and potentially elsewhere – of theirs.

Honda may be polite enough not to say it but the ebbing away of confidence in Britain as a place to invest should be of grave concern, not just in the automotive sector but far beyond.

Contributor

Rob Davies

The GuardianTramp

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