This article is more than 1 year old

This article is more than 1 year old

Fears are mounting that job losses from the closure of Honda’s Swindon plant could exceed the company’s estimate of up to 7,000, as industry experts and the business minister cast doubt on its claims that Brexit had nothing to do with the decision.

The Japanese carmaker confirmed on Tuesday morning that its Swindon factory would close from 2021 with the loss of 3,500 jobs, dealing another blow to a British car industry that has sounded repeated warnings about the dangers of Brexit.

Hours later, Honda said a further 3,500 jobs could be affected within the direct supply chain of subsidiaries and partner companies serving the plant, taking the total number of potential job losses to 7,000.

Automotive industry experts said the figure for supply chain seemed low and could be three times the figure quoted by Honda.

Theresa May told the cabinet that she had expressed her “disappointment” in a conversation with the president of Honda, according to the prime minister’s official spokesperson.

But while the company said its decision was tied to plans to invest in electric vehicles, insisting Brexit was not a factor, MPs and industry commentators questioned the claim.

In a speech to the manufacturers’ body, Make UK (formerly EEF), on Tuesday the business minister, Greg Clark, condemned lingering uncertainty about Brexit, saying “decisions like Honda’s this morning demonstrate starkly how much is at stake”.

He added that manufacturers’ concerns about a no-deal scenario were “project reality”, in an apparent reference to allegations from Brexiters that negative predictions are “project fear”.

Automotive industry experts said that while multiple factors are behind Swindon’s closure, uncertainty about Britain’s future trading relationship with the EU must have played a part.

“They [Honda] are probably trying to be polite publicly but there are a range of factors here,” said David Bailey, an economics professor at Aston University.

He pointed to a landmark free trade deal between the EU and Japan that will allow Honda to export cars produced in its domestic market free of tariffs by 2027, reducing its need for a European base.

But he said the lack of clarity about Brexit, coupled with poor industrial strategy on the part of the government, had made the decision easier for Honda. “I think we’re seeing a collision between Brexit uncertainty making investment difficult, just as the industry is transforming itself,” he said.

“Honda came to the UK because it offered a launchpad into the single market. There’s a lot of bewilderment in Japan about Brexit because what we offered them has been taken away.

“We’re not upholding our side of the deal so they don’t need to either. There may have been more of a chance of the UK being a centre of electric vehicle production if we stayed in the single market and if we had a more supportive industrial strategy.”

Ian Henry, a market expert at AutoAnalysis, said: “I don’t buy that it [Brexit] isn’t at all a factor. I don’t think it’s the most important one – but it could be the factor that might have been the straw that broke the camel’s back.”

The shadow business minister, Rebecca Long-Bailey, said: “The Conservatives’ Brexit deadlock is not only risking our future economy, it is damaging it right now.”

The Swindon factory produces 147,000 Civics a year amounting to about a tenth of total UK vehicle production.

Honda confirms Swindon factory closure – business live Read more

Clark said it was “a devastating decision” for Swindon and the UK.

He promised to set up a taskforce to find work for the plant’s skilled employees and make use of the site after Honda abandons it.

Katsushi Inoue, the chief officer for European regional operations and president of Honda Motor Europe, said: “In light of the unprecedented changes that are affecting our industry, it is vital that we accelerate our electrification strategy and restructure our global operations accordingly.

“As a result, we have had to take this difficult decision to consult our workforce on how we might prepare our manufacturing network for the future. This has not been taken lightly and we deeply regret how unsettling today’s announcement will be for our people.”

Honda is expected to move production back to Japan, partly because it can guarantee tariff-free exports to the EU.

Workers at the Swindon plant were sent home on Tuesday morning as the company said it would begin consultations with them and would be working closely with the Unite union over the months ahead.

Major carmakers such as Jaguar Land Rover (JLR), Ford, Toyota, Nissan and BMW have been warning about the impact of a no-deal Brexit. This is exacerbated by a slowdown in demand from China as well as slumping diesel sales caused by the continuing fallout from the “dieselgate” emissions scandal.

Several of Honda’s rivals are considering the future of their own UK operations, raising concern about Vauxhall’s Ellesmere Port facility, JLR’s Castle Bromwich factory and Toyota’s Burnaston site.