HONDA THIS week accused anti-euro newspapers and politicians of `hijacking’ its position on UK investment for their own ends.
The Japanese car maker said reports that it plans to start exporting vehicles from the UK to Japan for the first time are untrue, while so-called `new’ investment in its Swindon plant is in fact old news.
Eurosceptics seized on the reports as proof that global investment in the UK can thrive outside the single currency. However, Honda spokesman Paul Ormond said the company’s position was clear, despite being `hijacked’ by the national press: `For practical reasons, it would be easier for us to do business if the UK was in the euro.’
Ormond said reports that Honda will be exporting its Civic model to Japan and that it favours the UK because it is not in the eurozone, which seem to have originated in a Japanese newspaper, are both untrue.
`We have no plans to export the three-door Civic to Japan. We are increasing production capacity to 250,000 with the completion of our second factory in Swindon, but that is not news,’ he said.
The company is currently seeking to reduce its costs. It now spends £400m on components each year, sourcing 70% from the UK and 30% from the eurozone. That is to change to a 50/50 share between the two. The loss of UK supplier business due to this shift of policy will amount to £80m per year. Next month Honda will unveil several new models, including a small car for the European market which will be built at the new plant.
The episode is the latest in a string of controversies surrounding UK investment plans by overseas car manufacturers and how they are affected by the government’s policy on the euro.
Peter Wells, research fellow at the Cardiff-based Centre for Automotive Industry Research, said the national media and politicians were latching onto business decisions and drawing unjustified conclusions to support their own points of view.
Wells said: `Each company has to assess its own position. While the media concentrates on the UK exchange rate issue, the Japanese companies actually moved production out of Japan to avoid currency risk from the Yen.
`The newspapers’ views that British euro membership is not important to Japanese manufacturers are not justified,’ he said.
* Ford-owned car maker Aston Martin is planning a new factory at Gaydon, Warwickshire, creating up to 400 jobs. The plant is due to be completed within four years and will allow the company to develop a third model.
The other big five – and where they stand
Having the most efficient plant in Europe has not saved Nissan from export worries. The company’s president Carlos Ghosn has warned the government that the decision to build the new Micra at Sunderland is in the balance because of the lack of any clear timetable for UK entry into the single currency. Already looking to source more components from the eurozone, Nissan has been the most outspoken of the car manufacturers on the issue.
Since deciding to base its second factory in France in 1998, Toyota appears to have made a decision to move its operations steadily into the eurozone. By asking UK suppliers to bill in euros, combined with a new policy of buying more components from inside the eurozone, Toyota has effectively shifted itself financially into the single currency.
Production of Ford-badged cars in the UK will end when the current Fiesta is phased out in 2002, although the company denies that the decision relates to the UK’s position on the euro. A handful of UK suppliers are already billing and being paid by Ford in euros. The company has an official position supporting UK entry to the euro as soon as possible at the right exchange rate.
In May GM announced a £189m investment in its UK facilities. Its official policy is to support UK entry into the euro once the economic conditions are right. The company declined to reveal what share of its suppliers are based in the eurozone.
Like GM, Peugeot has said little regarding the UK’s currency position. This is probably because all Peugeot’s procurement operates out of France already a member of the single currency. Peugeot’s plant at Ryton in Coventry is working flat out, but a threatened strike over working hours has led to fears that Peugeot could think again over plans to build a new model there. Talks between management and unions are currently underway to try and settle the dispute.
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