And it's all because of the UK.
Late next month, the United Kingdom is slated to leave the European Union and, as of now, no one knows what will happen the day after. March 29 is the day for what’s been dubbed Brexit and automakers with manufacturing operations in the UK are rightly concerned. We’ve written about what Aston Martin, McLaren, and Bentley are doing to financially protect themselves from potential fallouts, but more mainstream automakers such as Ford are also being forced to take serious self-protection measures.
But what about Honda? It has a UK production facility that builds the Nurburgring record-holding Civic Type R hot hatch and regular Civic hatchback. According to a report coming from Reuters, Honda UK is preparing to build up inventories or front-load some production at its plant in Swinton, England.
The obvious goal is to avoid any supply chain, production and distribution issues. It’s really not a problem to actually build and export these Civic hatchbacks, but the concern is the regular delivery of parts. Without a constant supply of parts being imported, there won’t be any vehicles to build, and that could translate to serious problems.
Importing parts to the UK from the European mainland currently is not an issue, but without a Brexit deal in place by that deadline, Honda and other automakers are concerned parts will either be stuck at ports. Will there be customs checks? Free trade? Major questions and, at the moment, no answers.
Honda already announced last month that it will stop its British operations for six days this April to try to avoid any disruptions from a potentially chaotic Brexit. Other automakers are planning similar temporary factory shutdowns at that time.
However, it remains to be seen whether those shutdowns may not be so temporary. If the UK parliament and EU negotiators can’t hammer out a deal, then automakers like Honda may have no choice but to shut its UK factories for an extended period of time, which could lead to permanent layoffs.