Brexit will tank car industry, warns Honda

PUBLISHED: 13:34 18 September 2018 | UPDATED: 13:34 18 September 2018

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A no-deal Brexit would cost car manufacturer Honda tens of millions of pounds, the company's European boss has warned.

But Ian Howells, the senior vice-president of Honda Europe, said the company remained "right behind" its production facility in Swindon and was not considering moving the plant out of the UK after Brexit.

The Japanese company employs about 3,500 people at its plant in Wiltshire, building around 160,000 Honda Civics last year, more than 90% of which were exported to Europe and the US.

"Just-in-time" manufacturing processes depend on supply chains stretching around Europe, and any delays at ports could disrupt the flow of lorries arriving with components for the plant.

Mr Howells said that falling back on World Trade Organisation (WTO) terms would cost Honda "tens of millions", while the company would also face additional red tape if Britain left the EU without a trade deal.

"From an administrative point of view... we'd probably be looking at 60-odd thousand additional bits of documentation we would have to provide to get product to and from Europe," he told BBC Radio 5 Live's Wake Up To Money.

"If we end up with WTO tariffs, we'd have something like 10% of costs in addition of our shipped product back into Europe and that would certainly run into tens of millions.

"And likewise, when we're looking at componentry coming the other way, again tens of millions in terms of tariffs potentially coming into the UK.

"That impacts our productivity, certainly in terms of the flow of product, but also it does hit potentially our competitiveness. Of course if we are shipping and competing against a European manufacturer in Europe, they're not incurring those tariffs."

Mr Howells said the extra cost of moving components would create an "additional burden we would have to carry for UK customers", which could hit the company's competitiveness in the domestic market.

He said Honda had made "adjustments" to its procedures to allow it to store more components on-site, and was considering changes to production schedules if no deal was reached.

But he played down the prospect of a move away from Swindon, where the firm has operated since 1985.

"The UK forms part of our global network of manufacturing plants, it's not just for the European market," said Mr Howells.

"The only place we produce the vehicle we produce at Swindon is in Swindon itself. So from that point of view it's a very big decision to take a different approach.

"Certainly we are right behind our Swindon approach, and really it hasn't come up that we would have to look at putting Swindon somewhere else.

"The logistics of moving a factory the size of Swindon would be huge, and as far as we're concerned from a European [perspective], and as far as our Japanese head office is concerned, we're right behind supporting continued production at Swindon and indeed our whole European operation to continue there.

"In terms of the impact of Brexit, I think we are looking at hopefully relatively short-term disruption as we get used to the new rules and new ways of doing business."

Mr Howells said Honda backed proposals in prime minister Theresa May's Chequers plan for a "common rule book" with the EU for trade in goods.

"If it's easier for us to do that into Europe because there's a common rule book and common way of building and approving our vehicles, that's positive for us," he said.

"If those rules are the same as they are in the UK then of course, from a volume and productivity perspective, that's much more favourable for a company like Honda."

Labour MP Gareth Thomas, a supporter of the Best for Britain campaign for a second EU referendum, said: "Another day, another unnecessary blow to the country's struggling car industry by Brexiteers who just don't seem to care. Big players in the industry have been warning of this for a very long time.

"When you have huge employers like Jaguar Land Rover and Honda warning of an existential threat to their ability to carry on trading, it's time to stop and think about whether Brexit is really worth it."

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