Ex-Honda UK boss Philip Crossman details the factors he believes led to the factory’s demise
Jim Holder
22 February 2019

Honda’s Swindon plant and workforce are the victims of being “in the wrong place at the wrong time”, according to the firm’s former UK boss Philip Crossman.

Contacted by Autocar, Crossman was managing director of Honda UK from 2013 to 2016 and now consults for the car industry. He said: “A perfect storm has culminated in this devastating decision, and for the people involved it is heart-breaking.

“The one thing I know that didn’t lead to this decision was the quality of the workforce or the facilities at the plant. Honda standards generally are world class - they top quality polls everywhere - and the quality in Swindon was close to the top of all of Honda’s plants.

“The commitment and enthusiasm of the workforce is second to none. They will suffer the fallout from this, of course, but they are in no way to blame for it.”

Instead, Crossman detailed his belief that the decision was likely the result of numerous global and local events that culminated around the need to make a decision on where to make the next generation Honda Civic in around two and a half years’ time.

“Around 30 months before production is when investment decisions need to be made,” said Crossman. “The production cycle meant that it was time to decide what to do next, and that put Swindon in the spotlight at a time when the company was facing a lot of challenges. We all know the conclusion they came to.”

Faced with the decision of whether to invest in the Swindon plant to build the new Civic, Crossman believes that there were five key factors that delivered the final blow to its 3500 workers and the extended supply chain, estimated to total a further 10,000 workers.

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Global car market challenges

Shifting sales patterns around the world are impacting on every car maker, and Honda is not immune. Sales in China (see below) and the world’s second-largest car market, the USA, fell. Both are traditional strongholds for Honda sales. The figures in Europe were low too, at 0.8% of all registrations - down from a high of more than 2% in 2007.

Diesel’s decline was not a significant reason, however, argues Crossman. “They didn’t have a diesel until 2004, and even now a fraction of its global car sales were diesels,” he says. “The impact has been relatively minor as a result.”

Chinese market decline and shift

Honda has roughly doubled sales in China - the world’s largest car market - since 2013, but as with many car makers suffered a difficult 2018 as the market declined after years of steady growth. Furthermore, Honda’s reputation was hit hard by a quality issue with locally made cars that led to months of significant declines.

China is also leading the world for electric car sales, with around 35% electrified car registrations in the world registered in China. More than one million electrified cars were registered in China last year for the first time, and legislation and incentives - largely encouraged in order to lower the country’s dependence on imported oil - will drive that figure ever higher.

Electrification

This was cited by Honda as the primary reason for its withdrawal from Swindon - although critics argue that the investment challenge brought on by evolving technology was long-established and inevitable, irrespective of Swindon’s fate.

Crossman believes Honda’s interpretation was fair, however, saying: “The challenge is enormous and expensive. They are well-set for the long game, with advanced hydrogen fuel cell knowledge, but the interim gap requires enormous investment. That transition is vexing all car companies.”

Japan - EU trade deal

Crossman highlights the deal, signed last year, as weakening Swindon’s position. It kick-starts a process to reduce tariffs on cars brought in from Japan to the European Union from 10% to nothing, in stepped increments over a period of eight years. As a result, had another Civic been signed off for production at Swindon the full tariff-free deal would have been in force for its final years of life.

While Crossman would not comment on specifics that he has no knowledge of, with global sales shrinking and under-utilisation of factories rising as a result in 2018, Honda appears to have taken the decision to retrench to maximise use of its facilities in Japan. 

Brexit uncertainty

Honda specifically said Brexit was not a factor in its decision, and Crossman sees no reason to dispute that. However, he does argue that no business decision would be made without a full assessment of the prevailing business pressures. “They say it is not the reason for the decision - and I believe that - but it is hard not to look at it as a contributory factor. They needed to decide whether to invest in Swindon and the UK at a time when the conditions they would be working in are not clear,” he says. “Uncertainty does not help business.”

 

 

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Comments
13

22 February 2019

Interesting to read of quality problems with their Chinese arm. We bought an HR-V in 2015 and despite our past Hondas being 100% reliable (1 Japanese built, the other two in Swindon), the HR-V was the most unreliable car I've ever owned. That was built in Mexico which also had well documanted production issues. (Production of UK bound HR-V's has since moved back to Japan.)

I guess everyone can make a Friday afternoon car but my biggest problem with Honda is they wiped their hands of the matter - a fault they couldn't rectify yet refused point blankly to accept their Mexican plant was responsible.

Getting nowhere with the dealerships or Honda UK aftersales, I wrote to Philip Crossman about those problems, only for his secy to say he's since left the company. And now I read the same man talking about production issues at another facility.

 

22 February 2019

Their sales declined in the UK/Europe because people didn't like their cars anymore and they became expensive, the gap was filled by a certain South Korean company. There is a pure and simple rule, make cars for the market that people want.

Still good to see they're admitting their mistake of spending (wasting) billions on Hydrogen powered cars rather than a BEV although the Urban won't solve thier problem.

Too many mistakes and their employees are paying for it.

typos1 - Just can’t respect opinion

22 February 2019

Key fact in the article is that Hond's market share in Europe has dropped from 2% to 0.8% - and that's primarliy down to the product range. 

At 0.8% share of a market of 17.5 million cars that means Honda is only selling 140,000 cars a year in Europe.  Car plants for the volume manufacturers are geared up for 250,000 units a year to be economically viable - so, put simply, Honda isn't selling enough cars in Europe to make a plant here viable. The EU-Japan trade deal is the final straw, allowing Honda to make cars in Japan and bring them into Europe with no tariff. 

Better products that could have held the market share at 2% would have probably kept the plant going.

22 February 2019

It is a factor, and a big one.   When Honda are deciding if they're going to pump billions in to a factory they need to know if they'll be able to get a return on their investment.   Britain outside of Europe means 10% tariffs, whereas importing to the EU from Japan will have reducing rates over 8 years.   That's 5 years in for the new model!

 

Japan has a skills shortage and struggle to fill vancanies.   So that's a big drawback for taking production home for them.   Swindon could have capitalised on that alone.

 

Swindon lost out on future investments.   Brexit won't kill plants off over-night, but they will slowly die as retooling for newer models goes to other plants.

 

Take back control or is that take your benefits?   If only we could somehow stop this madness by revoking Art. 50?

 

22 February 2019
Blame that on Brexit shall we?

Pffffft!

Steam cars are due a revival.

22 February 2019

The latest Civic is god damn ugly!!!!! They used to design their European made cars in Germany but that facility was closed in 2009. So they reverted to designing them in Japan & we see what the result was!!!! Hideous, resulting in a drop in European market share from 2% to 0.8%. The poor workers at Swindon couldn't or shouldn't be blamed for that.

22 February 2019

Bingo, I have said that since they unveiled that hideous pig

Too late now.

22 February 2019

was the final nail in the coffin... sped up you might say for the EU because of the whole Brexit process.

22 February 2019
voyager12 wrote:

was the final nail in the coffin... sped up you might say for the EU because of the whole Brexit process.

Sped up you might say? Was it though? This was inevitable and has been on the cards no doubt for years.

Honda may have closed it's european design centre but the latest civic, I thought, was designed in their californian centre, it is quite american styled to my eyes.

22 February 2019
Selling the wrong vehicles is a fundamental issue but I can't see the point of the Turkey factory building fundamentally the same car in low volumes.

As well as assembling cars Swindon produces an excellent diesel engine - if Honda had tried selling it to competitors and politicians had made a fairer assessment of the pros/cons of diesels the story might have been different.

I can't understand why Japanese OEM's are pulling back to their own country when there are LCC on their doorstep such as Vietnam and Indonesia.

The site should be mothballed, possibly with State aid, and not flattened like Ryton, in case a future automotive use can be found for it.

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