Business secretary Greg Clark has said Honda’s decision to close its Swindon plant starkly illustrates the urgent need to strike a Brexit deal.
The Japanese carmaker confirmed on Tuesday that it planned to shut the factory in 2021 with the loss of 3,500 jobs – a decision first reported a day earlier by Sky News.
Honda said the announcement was not driven by Brexit, instead blaming “unprecedented changes in the global automotive industry”, in particular the shift to electric vehicles.
But with a possible no-deal departure from the European Union just weeks away, the decision was still seized on by those increasingly concerned about the prospects for business and the economy as 29 March approaches.
Mr Clark told a conference organised by manufacturing body Make UK: “Decisions like Honda’s this morning demonstrate starkly how much is at stake.
“A situation in which our manufacturers do not have the certainty they need about the terms under which two thirds of our trade will be conducted in 40 days time is unacceptable – it needs to be brought to conclusion without further delay.
“We will go on making sure that the argument that manufacturers put for a deal to be concluded swiftly is something that is heard loud and clear.”
He said business concerns about a no-deal Brexit were “project reality”.
Mr Clark’s comments follow a rebuke from Make UK chief Dame Judith Hackitt at the conference, who blamed some politicians for putting “selfish political ideology ahead of the national interest and people’s livelihoods”.
This had left Britain “facing the catastrophic prospect of leaving the EU next month with no deal”, she said.
Honda had previously said that a no-deal Brexit would cost it tens of millions of pounds.
Like other carmakers, it faces a major challenge should Britain’s departure from the EU disrupt just-in-time supply chains, adding to headaches created by a China-led world economic slowdown and the sharp decline in popularity of diesel vehicles.
Meanwhile, a new Japan-EU trade deal means Japanese firms can now enjoy frictionless trade with Europe without having to locate there, meaning it may make more business sense to relocate to its home market.
Mr Clark described Honda’s decision to quit Swindon as a “particularly bitter blow to the thousands of skilled and dedicated staff who work at the factory” as well as their families and many others working for the factory’s suppliers who will be affected.
Honda produced more than 160,000 cars in Swindon last year, where it first set up a base in 1985 and now makes its Civic model.
The plant exports 85% of the vehicles, with the bulk of them going to North America and 20% of those made being sold to Europe.
But it said it was revising its global manufacturing operations amid the “significant challenges” involved in the transition to electric vehicles and that it would “focus activity in regions where it expects to have high production volumes”.
It said under this restructuring, Honda UK’s role as a global manufacturing hub “may no longer be viable”.
Katsushi Inoue, president of Honda Motor Europe, said the “difficult decision” had been taken “in light of the unprecedented changes that are affecting our industry”.
He added: “This has not been taken lightly and we deeply regret how unsettling today’s announcement will be for our people.”
Honda said its European headquarters, focused on serving customers, would continue to be based in Bracknell.
The decision comes weeks after fellow Japanese carmaker Nissan also dealt a major blow to the UK when it said it had cancelled plans to build its X-Trail at its Sunderland factory.
Des Quinn, Unite’s national officer for the automotive sector, said: “We acknowledge the global challenges that Honda has outlined in its statement, but we don’t accept that this plant, with its highly skilled and dedicated workforce, does not have a viable future.”
The union is now entering consultation with the company and Mr Quinn said it would “leave no stone unturned to keep this plant going and its workforce in employment”.
He added: “While Brexit is not mentioned by the company as a reason for the announcement, we believe that the uncertainty that the Tory government has created by its inept and rigid handling of the Brexit negotiations lurks in the background.”