Honda has a reputation of manufacturing fantastic, quality cars. Cars like the Honda Civic and Honda Jazz have changed the public’s perception of cars over the years. Honda car manufacturing operation has built vehicles, which are also fun to drive and have proven to be very reliable family cars and generations of buyers have helped to create, a very special brand loyalty for Honda.
But Honda is set to announce the closure of its Swindon plant in 2022, putting 3,500 jobs at risk, sources say. Honda in Swindon is very reliant on a very effective supply chain. Honda receives 350 deliveries a day from EU suppliers carrying thousands of components into the UK. Honda has a very limited onsite inventory, approximately 12hrs worth of local production, so it needs a complex supply chain to support its production.
Honda pending decision to close this factory is also related to the UK Brexit Uncertainty. If the UK were to leave the EU without a deal. The UK would start to trade under World Trade Organization (WTO Tariffs) rules. Imported components from the EU could be delayed by customs processes at the arrival port and these components could also be subject to additional duties. Cars would be also subject to WTO duties of 10%. These additional duties could cost Honda, tens of millions of pounds each year.
Japan has recently signed a trade deal with the EU, which eliminates most tariffs, just at the same time the UK is planning to leave the EU. Honda has been manufacturing cars in the UK for over 30 years. Honda relies on a vast and complex supply chain, which employs thousands locally.
Honda, is the latest car manufacturer to announce plans to change their business operations as a result of changing global demand and the UK exit from the European Union in March 2019.
Nissan, Jaguar Land Rover and Ford have recently announced plans to change their production plans. Porsche are in the process of warning clients that they may be subject to the additional duty costs in the event of a no deal scenario.
Japanese firms, which together employ about 140,000 people in the UK, have made no secret of their alarm at the prospect that Britain will crash out of the EU ( Member Countries ) without a deal.
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