A hard Brexit would cost car maker Honda tens of millions of pounds in extra tariffs, the company warned today.
Honda, which employs 3,500 people at its plant in Swindon, Wiltshire, predicted that its costs would go up by around ten per cent if the UK cannot secure an exit deal with the EU.
Despite claiming that a hard Brexit would hit its competitiveness, Honda’s European boss Ian Howells said the firm was committed to its UK operation.
But Mr Howells said more bureaucracy and reduced productivity would also result if the UK crashes out of Europe without a deal and reverts to trading on World Trade Organisation terms.
Honda operates on a ‘just in time’ basis at Swindon and holds parts on site to cover one hour of production time. It requires 350 lorries a day to provide the parts it needs keeps the assembly line going.
Mr Howells told BBC Radio 5 Live: “We’d probably be looking at 60,000-odd additional bits of documentation we’d have to provide to get product to and from Europe.
“If we end up with WTO tariffs, we’d have something like 10 per cent of costs in addition on products shipped back into Europe and that would certainly run into tens of millions. Likewise, when we’re looking at components coming the other way, again tens of millions in 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.”
He said that despite these challenges, Honda UK’s Japanese owners had no plans to quit Swindon, where it builds the Civic and CR-V models.
“The logistics of moving a factory the size of Swindon would be huge and as far as we’re concerned, we’re right behind supporting continued production at Swindon,” he added.
Honda is the third UK-based car manufacturer to issue a Brexit warning this week.
Jaguar Land Rover is to switch more than 2000 staff at its factory in Castle Bromwich to a three-day week due to turbulence caused by Brexit and a fall in demand for diesel vehicles.
BMW also announced that the annual shutdown of its Oxford Mini plant would be brought forward from the summer to April 1, two days after the UK is due to leave the EU.
The company, which employs 4,500 staff at Oxford producing 5,000 cars a week, said the shutdown to allow for maintenance was being brought forward to offset any disruption caused by a hard Brexit.
Ralf Speth, chief executive of Jaguar Land Rover, told a summit in Birmingham this week that tens of thousands of jobs were at risk from a hard Brexit and it could cost his company £60m a day.
His claims were quickly dismissed by Tory Brexiteer MP Bernard Jenkin, who accused him of “scaremongering” and “making it up.”