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The BBC's Stephen Evans
"The dollar-pound rate is kinder to British exports"
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Tuesday, 31 October, 2000, 12:30 GMT
Honda delay blamed on strong pound
Honda factory Swindon
Honda still plans a second factory at Swindon
Honda has blamed a decision to postpone production of a new 'super-mini' at its UK plant on the high value of the pound against the euro.

But the company said the decision would not hit plans to more than double car production at its Swindon plant over the next two years.

In place of the new small car, which will be made in Japan, the UK plant will make Honda's new CR-V sports utility vehicle for export to the US.

Honda's Japanese competitors, including Nissan and Toyota, have cast doubt on the long-term future of their British operations unless the UK joins the eurozone.

Job assurances

Honda said it had not decided when production of the new small car would begin at Swindon.

"One reason for the postponement is the substantial fall in the euro," a spokesman said.

"If we can't fully utilise capacity in Britain, costs will rise, so by building and exporting the CRV we reduce costs, and this to some extent offsets the euro.

"We are looking at the UK factory as one of our supply sources to the global market," the spokesman added.

Honda UK denied reports that it planned job cuts at Swindon, which started making CR-Vs in June.

It still plans to take on another 1,000 workers to staff a second plant, which is set to go into operation from next summer.

Union reaction

Sir Ken Jackson, general secretary of the Amalgamated Engineering and Electrical Union, said he was disappointed that the new "super mini" will not be built at Swindon but added he was relieved that no jobs were being lost.

"This shows that unless we join the euro we will become uncompetitive and find it more difficult to export into Europe.

"Most companies will not be able to switch markets like Honda and job losses will undoubtedly follow," he said.

The Swindon plant hit the headlines in September when Honda announced plans to begin exporting cars from the UK to Japan.

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25 Oct 00 | Business
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What's left of the UK car industry
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UK chided again over euro
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Analysis: Europe's car industry
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