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A few thoughts from Japan on Honda's sad decision to close Swindon. (Honda will hold a press conference in Tokyo at 8am UK time.) There are two questions: why and why now? I think the answers are different. 1/
Why? Frankly, Swindon *never* made an adequate return for Honda. There's too much capacity in Europe and the situation got worse and worse as Honda’s market share fell. Output at 160k last year is sub-scale. It’s an obvious business decision to close it. 2/
However, Honda has avoided that obvious business decision for many years. Instead, they've tried everything possible to keep Swindon open, such as exporting to the US. 3/
Why now? Brexit promises to raise costs for parts and reduce access to the EU - fatal for an already marginal plant. More importantly, it gives a company that hates to close factories or sack people a license to act. 4/
The role of the EU-Japan trade deal is interesting. Britain pushed for the earliest possible reduction in EU auto tariffs, believing it would help Japanese assembly plants in the UK. There was some logic to this – if they had access to the EU market. 5/
German and French manufacturers always thought Japan would just move assembly home. With the UK outside the EU, the trade deal makes that easy. Past UK policy comes back to bite us. 6/
The next question is Toyota in Burnaston. That is an equally subscale plant. Business logic says Toyota should close it, but like Honda, they’ll try everything to make it work. I’m afraid the mood music from Toyota these days is not encouraging. 7/
It’s a tragedy really. Swindon was a huge investment, attracted with much difficulty, and started with high hopes. Once it’s gone it’ll never come back. I also wonder when we’ll hear the first UK voices calling for Trump-style protectionism. 8/8
