Honda to stun ministers with closure of Swindon factory

Honda is preparing to announce the closure of its factory in Swindon, dealing a devastating blow both to its 3,500-strong workforce and ministers' hopes that the UK will remain an elite manufacturing economy after Brexit.

Sky News has learnt that the Japanese car manufacturer could disclose the plan as soon as Tuesday morning.

A Honda spokesman did not return calls seeking comment on Monday.

If confirmed, the move will represent a further savage blow to Britain's automotive sector amid enormous uncertainty surrounding the terms of future trade with the European Union.

A source close to Honda said the company was expected to close its plant in Swindon in 2022, although the company will retain its European headquarters in Bracknell, Berkshire, as well as its Formula One racing team operations in the UK.

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The decision to permanently shut the Swindon factory will stun trade unions, and potentially put thousands of additional jobs at risk in the automotive industry supply chain and supporting businesses.

Honda produces well over 100,000 Civic cars at Swindon, which is the company's only factory in the EU.

While factors other than Brexit are said to have contributed to Honda's decision, the timing of its announcement is likely to be viewed as an incendiary development with a no-deal Brexit potentially just under six weeks away.

Theresa May attempted to reassure business leaders last week that an agreed departure from the EU remained the likeliest outcome, but was warned during a conference call that companies including Ford were accelerating plans to divert jobs and investment abroad.

Honda has manufactured vehicles in Swindon for more than 30 years, and insisted as recently as last autumn that it was committed to UK-based production regardless of the outcome of Brexit negotiations.

"The UK forms part of our global network of manufacturing plants, so the only place we produce the vehicle we produce at Swindon is in Swindon itself," Ian Howells, Honda Europe's senior vice-president, told the BBC in September.

"The logistics of moving a factory the size of Swindon would be huge and as far as we're concerned, we're right behind supporting continued production at Swindon."

Honda has previously said that a no-deal Brexit would cost it tens of millions of pounds.

Sources said that Honda was likely to relocate the manufacturing capability at Swindon to its home market of Japan.

The ability to guarantee tariff-free exports to the EU is understood to have been among the factors persuading the company of the merits of its decision.

It was unclear whether the government securing a wide-ranging free trade deal with the EU would have any impact on the company's decision, but one source pointed out that it would be highly unusual for such an announcement to be made unless it was deemed to be irreversible.

The Honda announcement comes just weeks after it said it was shedding hundreds of temporary staff at its Swindon plant because of an industry-wide decline in diesel car sales.

Honda's fellow Japanese vehicle manufacturer, Nissan, dealt a severe blow to the government earlier this month when it said it was cancelling plans to build its X-Trail SUV at its Sunderland factory.

That came despite a secret pact struck between the government and Nissan in 2016 which was supposed to ensure that the company would not be competitively disadvantaged, regardless of the fate of Mrs May's Brexit deal.

Greg Clark, the business secretary, is expected to address the EEF, the manufacturers' body, this week, when he is likely to face questions about the possible erosion of Britain's manufacturing base.

Airbus, the aerospace group which also employs thousands of people in Britain, has intensified threats to withdraw from the UK in the event of a hard Brexit, warning that while it would not close factories "overnight", their future would be increasingly uncertain.

:: Airbus helps No 10 'make clear' impact of no deal Brexit

In recent months, a number of big overseas carmakers, including BMW, have said they plan to idle factories for short periods soon after Brexit‎, in many cases bringing forward annual summer shutdowns.

The car industry operates on a just-in-time production basis, meaning delays to parts imports carry ‎huge financial costs.

Job cuts have also formed part of the automotive sector's growing response to Brexit, with Ford confirming recently that it is cutting up to 400 jobs at its Bridgend engine plant.

Last month, Indian-owned Jaguar Land Rover said it would axe 4,500 jobs, many of them management roles in the UK.