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HONDA: Europe is just not big enough
6:40pm Friday 11th January 2013 in News
HONDA’S decision to create 700 new jobs at its South Marston plant was heralded as the start of a business boom in Swindon.
That was the view in September 2006 when the Honda workforce had almost 5,000 people and the factory was building close to a quarter of a million vehicles every year.
Bill Cotton, who was the economic development director at Swindon Council then, said that the knock-on benefits from such a major investment would be massive and he was right.
Honda was on a roll. And then came the recession.
Two thousand jobs would eventually go and coupled with the recent Japanese tsunami and the flooding in Thailand, production at Swindon slumped to just 80,000.
While Bill said he could not reveal further details then, he said the council was already in talks with a number of big firms wanting to relocate here on the strength of Honda’s move.
But they never came, beaten by a recession which more than six years down the line we are still feeling.
The irony of it is that Honda make very good cars and their vehicles have a pure engineering excellence which other manufacturers drool over. But their market place, which is the UK and mainland Europe, is not big enough. Mainland Europe with Spain, Greece and Italy is suffering a worse recession than ours and no one wants new middle of the road cars. The UK is doing pretty good considering. Toyota and Nissan, who also manufacture in the UK, serve markets further afield.
Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders, said: “This is very disappointing news for Honda staff and their families.
“The decline in European new car markets and uncertain growth prospects has forced a number of vehicle manufacturers to restructure their operations.
“Despite challenges brought by weak European demand, the longer-term prospects for the UK automotive sector remain good.
“The industry has seen £6bn of new investment from a wide-range of global vehicle manufacturers during the last two years and there is demand for skilled workers in the automotive industry and other high value manufacturing sectors.
“We hope that those affected will be able to take advantage of the opportunities we know exist throughout the UK sector and its supply chain.”
Honda have been badly hit on the manufacturing front because 90 per cent of their production goes to Europe.
Swindon’s two MPs have spoken of their disappointment on hearing the ‘devastating’ news but have vowed to work with Honda and other organisations to lessen the impact for workers.
North Swindon MP Justin Tomlinson said: “It is extremely disappointing news. It has been challenging times for Honda, and it appears the sales in Europe have fallen off a cliff edge.
“This comes as a blow to the good news back in April last year when they took on the 500 new staff.
“I will be working with Honda and other organisations to help these people who will find themselves out of a job.
“I have spoken to Honda and they have assured me their long term commitment to Swindon.
“We will be talking to other organisations in Swindon such as B&Q and Aldi to see if they can take some of the workers on.”
Robert Buckland, MP for South Swindon, said he has already taken steps to make sure Honda and the Job Centre work closely to ensure that employees that face redundancy are given the skills to get a new job.
He said: “It is devastating news. We do not know fully who will be affected by these redundancies but what I want to make sure is that Honda are working with the Job Centre, so that the people affected will get the best support during what will be a difficult and traumatic time for their families.”
The Department for Business, Innovation and Skills the job cuts are a bitter blow to the workforce and the local area.
“We will be working with local partners to minimise the impact of the job losses,”said a spokesperson.
“Times are tough in the European market but the automotive industry remains a major success story for the UK.”
There are no easy solutions for Honda but the mere fact that they are aiming to build 150,000 vehicles during 2013/14 shows confidence in their own abilitities. But then last year they took on 500 new employees. They’ll be joining the 800 who are facing redundancy in the next few weeks.