The announcement Honda would be closing its plant in Swindon, initially revealed by Mark Kleinman on Sky News, was nothing short of a shock.
The Japanese car manufacturer had, after all (as Simon Jack subsequently noted on the Today Programme) insisted the Swindon plant remained critical to its operations as recently as 2017. So, news the plant would not be closing altogether would have been felt like an earthquake by Honda’s employees, the plant’s supply chain, and by government.
In formally announcing the decision 24-hours later, Honda’s business case was comprehensive. It needed to focus on electric vehicles, while the American, Japanese and Chinese markets were more fundamental to the company than a European market representing only a small percentage of sales. But this again will have rung very hollow with employees and members of the supply chain, who face uncertainty over their futures ahead of the planned closure in 2021 – the start of the next five-year cycle Honda (like all car manufacturers) works to, which explains how the company justifies rowing back on its commitments made in 2017.
First and foremost, the announcement is devastating to the plant’s workers, the supply chain and the local economy, with as many as 13,500 jobs in jeopardy. Honda has announced it is to consult on the planned closure, and close attention will be paid to the support available to employees – along with how the Government might attempt to intervene through encouraging alternative investment in the area, or supporting the retraining of Honda staff.
The announcement is significant in a number of ways. It’s a further blow to the UK car industry following Nissan’s announcement its new model would not be made in Sunderland. And, while the Swindon closure is not currently scheduled to take place before 2021, it will impact on UK unemployment levels. This in a week in which the Office of National Statistics reported that 32.6m people are now in work, up more than 440,000 from this time last year.
Inevitably though, much of the commentary about the Swindon closure was to what extent it was linked to – indeed, caused by – Brexit. Remainers were swift to highlight continuing uncertainty and the damage Brexit could cause to the economy, particularly in the event of no deal. Business Secretary Greg Clark used his remarks on the announcement to conclude that any scenario in which manufacturers lacked certainty was “unacceptable.” And Leavers were equally quick to point to Honda’s insistence the decision was not driven by Brexit but rather by changes in the global automotive market.
But the reality is Honda’s announcement must be seen through the Brexit prism – specifically in terms of how the economy can be robust enough to manage not only changes caused by leaving the EU, but by other factors.
Having a cold does not mean you’re immune from falling over and breaking an arm after all. In the same vein, it’s important to remember that while Brexit is vitally important and seemingly dominates every waking moment, it’s not the only game in town. The question of whether Brexit was or was not a factor in Honda’s decision to close the Swindon plant is essentially a bit of a red herring.
A more pertinent question perhaps is how resilient is the UK economy? The global economy and trends in individual sectors will lead to some positive announcements, including investment in the UK, but also negatives in which investment in moved abroad. At a time when the UK is fundamentally changing its relationship with Europe – irrespective of whether you believe it to be for good or ill – the question should be to what extent is the economy and the Government able to absorb non-Brexit business decision making in a Brexit world.