Business

The demise of Honda's only U.K. factory sums up Britain's Brexit angst

by Lucy Meakin and Charlotte Lait

Bloomberg

Swindon, famous for its traffic intersections and steam-engine past, feels like Brexit Britain in a nutshell.

Like the United Kingdom in general, the city of about 180,000 people boasts a proud industrial heritage stretching back to the 19th century. Current unemployment is low and the local economy has done reasonably well in the past few years.

Yet the planned closure of the local Honda Motor Co. factory has dramatically altered the outlook, and residents are on edge.

“Honda leaving is like Brexit,” Dimitri Bretti, said through the serving window at Street Cafe, his burger joint just off the main street. “Nobody knows what comes next.”

While Brexit wasn’t to blame, according to Honda’s bosses, it will likely make finding a replacement employer all the harder.

Companies aren’t willing to put money in the U.K. right now given the uncertainty over the country’s future relationship with Europe. Nationally, investment has fallen for four straight quarters. That’s the worst stretch since the financial crisis, a time when Honda halted local production for four months.

Swindon, about 110 kilometers west of London, voted to leave the European Union in 2016 by an almost 55 percent majority. It’s not known for being exceptionally beautiful or cultural — its most famous landmark might be the “magic roundabout” intersection that encompasses six traffic circles in one.

The end of the Honda site hits manufacturing links that go back to the Industrial Revolution. It was here that the bulk of locomotives for the famed Great Western Railway were built, and the town took over production of Spitfire fighter jets in World War II after the main plant was bombed.

Lifelong resident Neil Toolan said the Honda decision reminds him of the demise of the local train industry in which he worked alongside his father and uncle. The main factory shut down in 1986.

“It is difficult, very difficult,” said Toolan, who eventually found a job with Royal Mail.

Britain has long been a Japanese hub for European auto production, with Honda, Nissan Motor Co. and Toyota Motor Corp. owning three of the country’s six largest factories. In pulling out, Honda cited changing global trends and slowing demand. That’s been evident for a while to the truck drivers who deliver parts to the sprawling complex on Swindon’s northeast edge.

“The amount of stuff that’s going in there over the last six to eight months, it’s just been pffff — it’s dropped right off,” says Ron Dunn, who drives his Yusen Logistics truck filled with electronic parts and air conditioning unit radiators from Milton Keynes to replenish the factory warehouses each day.

“Some of the guys I was talking to yesterday, they’ve got families, they’ve got mortgages and that. What are they going to do?”

Honda’s factory is the size of 280 football fields and employs 3,500 people. Closing it down will be seen as another mark in the decline of British manufacturing.

There’s been a wave of bad news for the auto industry. Jaguar Land Rover, Britain’s biggest automaker, is scrapping jobs worldwide, many of them in the U.K., and there are questions about the future of facilities run by Ford and Peugeot.

Just this month, Nissan scrapped plans to build the X-Trail sport utility vehicle at a plant in Sunderland due to a slump in demand for diesel cars and the unresolved status of U.K. trade after Brexit.

Global trade conflicts aren’t helping either, with European automakers bracing for potential U.S. import duties. More than half of the Honda Civic models made in the U.K. are currently exported to North America.

Yet in recent years Swindon has fared well economically with its mix of manufacturing and services jobs at big local employers like Nationwide Building Society, a mortgage lender, and stationery retailer WH Smith. Unemployment is low and wages are typical for the country overall. Workers are also more productive than average, official figures show.

While the job losses at Honda are a small number compared with the 160,000 jobs created across the U.K. in the last quarter, it’s still a body blow to the town.

Truck driver Marcin Kaliniewicz, who estimates that about 90 percent of his current employer Nissin (UK) Ltd.’s contracts are related to the car factory, says he knows Honda workers who had been planning to buy homes in the area, but “everyone is going to change plans now.”

According to Lorraine Kardasz, who works at the Swindon Carers Center and knows families where multiple generations work at the Honda plant, the closure is casting a big shadow over the town.

“I don’t think there’s a huge amount of job prospects out there for people,” she said, gesturing down the main shopping street. “There’s a lot of families that are going to be relying on that money and when it’s gone they’re really going to struggle.”