You Can’t Blame Brexit Alone for the U.K. Auto Industry’s Woes
Tuesday morning’s confirmation that Honda will close a major U.K. plant appears to confirm that Brexit is hammering the auto industry before it even happens. However, the truth is more complicated than that—as Honda has been at pains to point out.
The Swindon plant, which currently employs 3,500 people and produces engines and the Civic sedan, is not the company’s only cutback. Honda will also stop producing the Civic in Turkey (though it will maintain operations in that country) as part of a wider global restructuring. “This is not a Brexit-related issue for us. This decision has been made on the basis of… global changes,” Honda’s senior vice president for Europe, Ian Howells, insisted.
That may be the case, but try telling it to Honda’s workers. As the Guardian reports, many of them see Brexit as the reason. “People voted for something without thinking of the consequences,” one told the paper.
It is not unreasonable for these soon-to-be-laid-off workers to place the blame for the factory closure at Brexit’s door. When Nissan decided not to make its X-Trail SUV in the U.K. as planned, it said Brexit uncertainty was making it harder to “plan for the future.” Jaguar Land Rover also cited Brexit as a factor when it announced 4,500 job cuts last month. The British auto industry as a whole has seen investment plummet in the last year and recently warned of “permanent devastation” in the increasingly likely event of a no-deal Brexit.
But in each of these cases, Brexit wasn’t the only factor by any means.
Nissan said its decision was partly due to reduced sales forecasts and the impact of new European emissions regulations—the X-Trail is a diesel-powered beast and Europe is turning its back on diesel, with plans for full-on phase-outs. Guess what Land Rovers also tend to run on. And guess what sort of engines Honda’s Swindon plant produces.
Also note that when the U.K.’s Society of Motor Manufacturers and Traders issued its “devastation” warning last month, it cited diesel uncertainty and Chinese and EU economic slowdowns as factors alongside the Brexit fiasco.
The global picture matters hugely here. AutoCar’s James Attwood made a good point in a Monday op-ed when he wrote: “You can’t ignore global trade, such as Donald Trump’s threat to impose huge tariffs on cars imported from Europe into the U.S.–such as the Civic. At the same time, the European Union and Japan recently agreed a trade deal that effectively removes tariffs on Japanese-built cars imported into Europe. That reduces Honda’s need to have a European manufacturing base.”
The auto industry as a whole is in a period of massive upheaval, as the fossil-fuel era sputters slowly towards its replacement by electrification, as consumer tastes change, and as trade disputes threaten to complicate matters even more. So what’s happening to the British auto scene is not all Brexit’s fault.
But to see the recent announcements as unrelated to Brexit would be utterly blinkered. The wider landscape provides too many other clues as to what’s going on—the departures of Dyson, Sony and Panasonic; the massive outflow of capital to the EU; the desperate warning from Airbus CEO Tom Enders about “the Brexiteers’ madness” threatening tens of thousands of jobs.
Brexit is only part of a bigger puzzle here, but it’s clear that for the British automotive industry, it could not come at a worse time.