Honda’s impending closure of Britain plant not Brexit-related: president

Honda president Takahiro Hachigo said it was ‘very regrettable’ to have to close the plant but said it was the ‘best choice’ considering current conditions. (AFP)
Updated 19 February 2019
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Honda’s impending closure of Britain plant not Brexit-related: president

TOKYO: Honda announced Tuesday it would shut a major plant in Britain, putting 3,500 jobs at risk as the auto manufacturer became the latest Japanese firm to downsize operations as Brexit looms.
The factory in Swindon, southwest England, is Honda’s only EU plant and has produced the manufacturer’s “Civic” model for more than 24 years, with 150,000 units rolling off the line annually.
The plant will shut in 2021, Honda announced, “at the end of the current model’s production lifecycle.”
The decision “has not been taken lightly and we deeply regret how unsettling today’s announcement will be for our people,” said Katsushi Inoue, chief officer for European regional operations, in a statement.
The firm blamed “unprecedented changes in the global automotive industry” for the decision but it comes amid investment uncertainty in Britain ahead of the country’s exit from the EU.
Speaking to reporters in Tokyo, Honda president Takahiro Hachigo said: “I’d like you to understand this is not related to Brexit.”
He said it was “very regrettable” to have to close the plant but said it was the “best choice” given the need to reduce production capacity and reform its global facilities.
The firm also announced it would stop manufacturing the Civic model in Turkey in 2021.
Honda joins fellow car giant Nissan as well as Japanese firms Sony, Panasonic and Hitachi in scaling back operations in Britain ahead of the country’s departure from the European Union.
Analysts say that while Brexit was almost certainly a factor for Honda, other reasons were likely to have played a part, including a massive EU-Japan free-trade agreement recently signed and the wider struggles of the car industry.
“Honda seems to have been preparing for this for a long time. Then Brexit happened, which might have pushed the company to make the decision now,” Seiji Sugiura, analyst at Tokai Tokyo Research Institute, said.
Speaking ahead of the formal decision, local finance worker Sue Davis, 49, said the move would be “devastating” for the area.
“I think Swindon’s finished without Honda. My ex-husband works there, has done for 20 years. He’s going to be without a job, so I just think it’s really, really bad news.”
Local MP Justin Tomlinson tweeted ahead of Tuesday’s announcement that the decision had been made “based on global trends and not Brexit as all European market production will consolidate in Japan in 2021.”
Earlier this month, Nissan axed production of the X-Trail SUV in the Brexit-backing northeast city of Sunderland, despite government assurances over the consequences from the EU exit.
Nissan Europe chairman Gianluca de Ficchy said then that the cuts were made “for business reasons” but admitted that “the continued uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future.”
Auto giant Toyota also warned in February there would be no way to avoid a negative impact in the event of Britain crashing out of the EU without a deal.
Toyota executive vice president Shigeki Tomoyama noted that the firm’s assembly plant in Burnaston, central England, which produces 600 vehicles per day, operates under the “just-in-time” system that relies on a smooth flow of components from the EU.
“We will have to halt the plant if the car parts are not brought in” from the continent, Tomoyama warned.
Japanese electronics giants Sony and Panasonic, as well as several banks, have moved some of their operations out of Britain since the 2016 referendum that set Brexit in motion.
Prime Minister Shinzo Abe pleaded against a no-deal Brexit in recent talks with his British and German counterparts, telling Theresa May last month: “We truly hope that a no-deal Brexit will be avoided and in fact this is the... wish of the whole world.”
And Japanese officials have reportedly become frustrated with their British counterparts as they negotiate a potential post-Brexit trade deal.
Britain is due to leave the EU on March 29, but its parliament last month rejected a draft divorce deal May negotiated with the bloc, prompting fears the country could crash out without an agreement next month.


British Steel collapses, threatening thousands of jobs

Updated 22 May 2019
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British Steel collapses, threatening thousands of jobs

LONDON: British Steel Ltd. has been ordered into liquidation as it struggles with industry-wide troubles and Brexit, threatening 5,000 workers and another 20,000 jobs in the supply chain.
The company had asked for a package of support to tackle issues related to Britain’s pending departure from the European Union. Talks with the government failed to secure a bailout, and the Insolvency Service announced the liquidation on Wednesday.
“The immediate priority following my appointment as liquidator of British Steel is to continue safe operation of the site,” said David Chapman, the official receiver, referring to the Scunthorpe plant in northeast England.
The company will continue to trade and supply its customers while Chapman considers options for the business. A team from financial firm EY will work with the receiver and all parties to “secure a solution.”
“To this end they have commenced a sale process to identify a purchaser for the businesses,” EY said in a statement.
The government said it had done all it could for the company, including providing a 120 million pound ($152 million) bridging facility to help meet emission trading compliance costs. Going further would not be lawful as it could be considered illegal state aid, Business Secretary Greg Clark said.
“I have been advised that it would be unlawful to provide a guarantee or loan on the terms of any proposals that the company or any other party has made,” he said.
Unions had called for the government to nationalize the business, but the government demurred.
The opposition Labour Party’s deputy leader, Tom Watson described the news as “devastating.”
“It is testament to the government’s industrial policy vacuum, and the farce of its failed Brexit,” he said in a tweet.
The crisis underscores the anxieties of British manufacturers, who have been demanding clarity around plans for Britain’s departure from the EU. Longstanding issues such as uncompetitive electricity prices also continue to deter investment in UK manufacturing, said Gareth Stace, the director-general of UK Steel, the trade association of the industry.
“Many of our challenges are far from unique to steel — the whole manufacturing sector is crying out for certainty over Brexit,” Stace said. “Unable to decipher the trading relationship the UK will have with its biggest market in just five months’ time, planning and decision making has become nightmarish in its complexity.”
Greybull Capital, which bought British Steel in 2016 for a nominal sum, said turning around the company was always going to be a challenge. It praised the trade union and management team, but said Brexit-related issues proved to be insurmountable.
“We are grateful to all those who supported British Steel on the attempted journey to resurrect this vital part of British industry,” it said in a statement.