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Honda temporarily closing U.K. factory

A Honda worker in Swindon, southwest England rejoices as he leaves the factory for a four-month break with pay. Honda is closing its U.K. factory doors for four months, but not laying off its staff.

TEXT OF STORY

Steve Chiotakis: In Japan today, we learned industrial output dropped by almost 10-percent last month. That's the biggest decline in half-a-century. Some of the country's best-known exporters are reporting sharp drops in demand. This morning, reports are that Toyota will face its first operating loss ever. And rival carmaker Honda today is shutting down its main British factory for four months. From London, here's Stephen Beard.


Stephen Beard: More than 4,000 Honda workers in Britain will be laid off until June. They'll get full pay for the first two months, then 60 percent until the factory re-opens.

The company says that no-one will be fired -- it remains committed to retaining the workforce. But the planned shutdown is the longest in Britain's recent industrial history.

Auto analyst David Bailey says it's a serious psychological blow:

David Bailey: Honda is one of the most efficient producers in the U.K. and one of the most flexible. The fact they have to close for four months is unprecedented and shows the seriousness of the situation.

When work resumes, the factory will make half the number of vehicles it made last year. Honda's sales collapsed at end of 2008. In the last quarter, the company's profits fell by 90 percent.

In London, this is Stephen Beard for Marketplace.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.
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