UK Markets open in 1 hr 49 mins

Honda could stop car production in Britain post-Brexit

Luke James
Brussels correspondent
Some of the 3,600 workers at Honda’s site in Swindon (PA)

Carmaker Honda (HMC) has delivered a fresh warning that thousands of British jobs could be lost if the UK leaves the EU’s customs union.

British MEPs met representatives of the Japanese car market in Ghent, Belgium on Thursday to discuss the potential impact of Brexit on businesses.

They were told that the government’s plan to leave the customs union could hit their profits so substantially they could be force into leaving the UK.

“What he told us is that for companies like Honda any delay in bringing their goods in or out, any additional tariffs, which there will be if we’re not in the customs union, will seriously impact on their bottom line and they may not be able to continue production in the UK.”

MORE: Key part of May’s Brexit plan meets resistance in Brussels

Honda currently employs 3,600 people at its factory in Swindon and has its European headquarters in Bracknell.

Cato’s account is consistent with evidence given by the company to the Commons business select committee in November.

Honda UK government affairs manager Patrick Keating said at the time: “Outside of the customs union, there is no such thing as a frictionless border.”

MEPs were told Thursday that the company’s Swindon site, where the new Honda Civic model is being manufactured, receives 350 deliveries of EU-sourced parts every day.

Some of those components arrive less than one hour before assembly as part of the ‘just in time’ supply chain which is facilitated by the customs union, which eliminates border checks on goods going to or from member states.

General view of a Honda sign outside of Honda of the UK Manufacturing Ltd’s factory in Swindon

A delay in deliveries could cost the company up to £1m-a-day, Honda representatives told the MEPs.

Labour MEP Seb Dance said: “We must assume the plant could not realistically continue under conditions where goods could not flow.”

And Cato said: “My visit to the port of Ghent today has left me in no doubt that if the government drive us over a cliff, companies like Honda, one of the South West’s largest employers, may no longer be able to retain production in Swindon.”

The UK government wants to put in place alternative arrangements to maintain frictionless trade.

MORE: UK to keep EU rules on workers’ rights and the environment after Brexit

Its ‘Chequers plan’ proposed a “free-trade area” for goods which would see the UK accept EU rules, accompanied by a customs arrangement that would involve the UK collecting tariffs on behalf of the EU.

Brexit Secretary Dominic Raab is continuing to push the proposals in negotiations today despite the fact they have been rejected in Brussels.

Labour MP Stephen Kinnock claimed Barnier told him the Chequers plan is “dead” at a meeting in Westminster last week, but that has been disputed by EU officials.

European Commission chief spokesman Margaritis Schinas pointed out the meeting in which Barnier was meant to have made the remark was not public.

He said that was a “perfect recipe for everyone coming out of there and saying what one or the other understood Michel saying.”