Alan Tomala can remember February 19, 2019, like it was yesterday. While driving to a meeting in Taunton, in the west of England, he recalls the 12 o’clock news suddenly switching on.
The Japanese carmaker Honda had just announced plans to close its Swindon plant, bringing an end to more than three decades of operations, and 3500 jobs, along with thousands more in the supply chain.
“My phone just leapt off the hook,” he recalls. As a Unite the Union official, representative for Honda workers and a former employee, Mr Tomala drove straight to the Swindon plant, where he was met with a “media circus” outside the site.
The next day, stewards of Unite the Union met with Honda. The company explained that its decision was based on a shift to electric vehicles and that “Swindon was not the right plant to utilise that type of production”, says Mr Tomala.
As communities built around the automotive industry deal with the risk of restructuring and divestment worldwide, Swindon is paving the way for a future without Honda, which is shutting down its local facility in July 2021. While industrial and logistics developer Panattoni agreed in March to take over the site, with plans to invest £700m and invite new employers, concerns persist over whether low-paid jobs will fill the void left by Honda’s departure.
Swindon is no stranger to transition. The town’s location, halfway between London and Bristol, made it ideal as a stop for the Great Western Railway built by Victorian engineer Isambard Kingdom Brunel.
In 1843, a railway works building trains opened next to Swindon station, and stayed open until 1986. That year, Honda bought a 370-acre airfield site in South Marston — was formerly a factory for Royal Air Force fighter planes — and began transforming it for its UK operations.
“[Honda has] been a fantastic partner to work with, and to have in Swindon for the past 30 or so years,” David Renard, the leader of Swindon Borough Council, tells fDi. Its site in north-east Swindon grew to become its European flagship factory, with one engine and two car plants. In 2001, its capacity rose to 250,000 vehicles per year, including its Accord Civic and CR-V models, and exported to more than 70 countries worldwide.
At its peak in 2007, the Japanese carmaker sold more than 311,000 cars into Europe, according to data compiled by CarSalesBase — many of which were produced in Swindon. But then the financial crisis hit, beginning a decline in Honda’s European sales and a scale-back of its Swindon operations. By 2019, when the closure was announced, Honda was under-utilising its 370-acre site, having sold just 123,000 cars into Europe.
As Swindon’s third-largest employer, the Japanese automaker’s decision to exit the area has created a precarious situation for thousands of employees at Honda and in its supply chain.
In May 2019, hundreds of Honda workers marched through Swindon to save their jobs. National and local taskforces of business, political and community leaders, such as the Honda Steering Group, rallied together to reverse the automaker’s decision.
However, despite these efforts, Honda has stuck to its plans to divest and focus on markets in Asia and the Americas as part of their electrification push.
An agreement was reached for Honda to pay its workers redundancy packages equivalent to six-and-a-half weeks’ pay for every year they worked at the plant. A multi-stakeholder group that includes Honda, Swindon Borough Council, and redundancy and business support companies, such as YTKO, LHH and Penna, are also helping to re-skill and support workers to find future career paths.
A company spokesperson tells fDi that Honda’s priorities “continue to focus on providing our [employees] with a comprehensive support programme, which consists of well-being, financial, training and career-transition provision”.
As Honda workers prepare for their future, the carmaker says it has seen more than 4500 registrations by its employees at networking events with companies and recruiters interested in their skill sets.
Jonathan Gratton, who worked at Honda’s plant in quality assurance since 2012, said it was a “shock” to everyone when the closure was announced. Similar to his colleagues, Mr Gratton had originally made the move to Honda for the generous wages and career progression options available at the company.
Now, many former workers from both Honda and its supply chain worry about their future livelihoods, even as other companies such as Amazon are hiring in Swindon. For Mr Gratton, however, support provided by Honda and local business support organisations, such as YTKO, has enabled locals to plan their next move.
“[Despite the negative headlines], there is light at the end of the tunnel,” he notes. “It is sad that the Honda plant is closing, but it has given me a fantastic opportunity to pursue a dream of mine.”
Together with a few colleagues, Mr Gratton will set up a garage called G-Revs, utilising his previous experience from being both a mechanic and working at Honda to do “all kinds” of automotive repairs.
“All the support has given me the confidence to pursue this business idea. We have never run a business before, so the help from Honda and YTKO has been crucial,” he adds.
Toby Howkins, a project director at YTKO, which provides advice and business support for entrepreneurs, and small and medium-sized enterprises across the UK, has been helping workers and businesses through the transition.
“Our support is available to anyone affected,” he says, adding that services cover everything from skills development and CV writing, to housing and financial assistance. He notes that many Honda workers are over the age of 50, making them more likely to explore future self-employment than their younger counterparts in less stable financial situations.
“Flexibility and client-centred support is essential. We need to work closely with individuals to understand their goals and educate them on the local market, particularly given the impact of Covid-19,” he adds.
Swindon and Wiltshire Local Enterprise Partnership (SWLEP), a public–private body that sets the economic priorities for the local area, has allocated £2.4m towards YTKO and other organisations to provide support services for Honda’s employees and suppliers.
Elsewhere, a roadmap has been laid out for Swindon’s future, including the Kimmerfields regeneration scheme, which will see a long-vacated 20-acre brownfield site redeveloped between the town’s railway station and retail core, including proposals for a new cultural quarter.
In June 2020, Switzerland-based Zurich Insurance announced plans for a new office in the Kimmerfields development, with a new building for its 950-strong workforce due for completion in 2022.
John Keppel, Zurich Insurance’s UK chief operating officer, says that Swindon has an important skill base for the company’s life insurance business, adding that the town’s geographical position, transport connections and diversity of large employers make it an attractive place to invest.
“Swindon has a lot to offer, with or without Honda. It’s unfortunate for the community to lose a major employer, but I think communities such as Swindon have recovered from far more substantial shocks,” he says, adding that the town prides itself on low levels of unemployment.
In 2020, Swindon had an unemployment rate of 3.9%, which is below the UK average of 4.6%, according to ONS estimates.
Supply chain impacts
Even with Swindon’s broad-based economy, including financial services, pharmaceuticals and logistics, Honda’s supply chain is set to be hit hard by the carmaker’s departure. Mr Howkins admits that the loss of Honda contracts is a “critical issue” for suppliers, despite help given to them to explore selling their products to other businesses.
Mr Renard says that some companies in the supply chain will be able to diversify, but a few were “totally dependent” on Honda’s plant.
“We’re going to make sure that as many of those companies survive the transition as possible. I’m confident that the vast majority of them will have a bright future,” he says.
But for some companies, such as TS Tech, which supplied car seats to Honda’s assembly line, the plant closure has already led to job losses. Alan Kimber, a former software developer at TS Tech, says staff numbers were significantly reduced at the company’s Swindon site, with many of his colleagues worried about their future.
But he has turned this “sad” situation into an opportunity. After taking a three-day course run by YTKO, Mr Kimber is pursuing a passion project by opening a new club called Merlin’s Pool Hall in the nearby town of Marlborough.
“Warehouse contracts are not going to fill the void left by these lost manufacturing jobs,” he says. “I think people should use their generous redundancy packages to set up businesses.”
For Honda workers hesitant to explore entrepreneurial opportunities, there are several companies expanding in Swindon hoping to re-employ them, such as US-based XPO Logistics. Gavin Williams, a managing director of supply chains at XPO’s UK and Ireland operations, affirms that Swindon is an attractive location.
“We have valuable job opportunities for people in logistics support roles and permanent driver positions. XPO is in a period of growth, with a recent UK acquisition and a large contract renewal with Iceland Foods, served by our Swindon distribution centre,” he adds.
Swindon-based manufacturers are also trying to leverage the engineering skills left by Honda. Penny Grobler, the HR director at Recycling Technologies, which is setting up a manufacturing plant to transform waste plastics near to Honda’s site, says that Honda’s skilled workers have a lot of transferable skills for their operations.
“Swindon is a treasure trove of different kinds of industries, so the skill scope is pretty wide. It’s a great place to set up a manufacturing facility,” she adds.
Ms Grobler admits that it was “devastating” when the Honda news broke, but is confident that the town can adapt, given its diversity of businesses.
Swindon’s broad base of multinational corporations includes German carmaker BMW, which produces components for its Mini plant in Oxford; US pharmaceutical giants Catalent and Thermo Fisher Scientific; Japanese semiconductor firm Socionext; and Swiss electronics specialist TE Connectivity.
Retraining and skills development
Paul Moorby, the chair of SWLEP and managing director of local parking software company Chipside, says that skills have been the focus of local economic development efforts.
“If you're building a new economy, you have to start with the people of the future,” he tells fDi. “Those are our school children, and people at college and university. That’s where the investment has been focused.”
In August 2020, Swindon’s two colleges merged to form New College Swindon, which is currently developing a new institute of technology (IOT) — one of 12 employer-led training facilities being built around the UK.
Chris Baish, the managing director of New College Swindon’s IOT, says that it was set up to increase local participation in higher education and act as an organisation that can fulfil a range of employer needs.
“IOTs bring together a tripartite set of expertise from colleges, universities and employers,” he explains. “Over time, we’ve seen a shift in companies recognising the real benefit of finding talent from different sources, whether through apprenticeships or students at college, BTECs or a higher technical level.”
The institute specialises in providing higher education certificates in areas ranging from engineering and manufacturing to science, health and digital skills. Local employers, including Nationwide Bank, BMW, Catalent and Recycling Technologies, have acted as anchor partners with the IOT to develop a future pipeline of talent.
“The IOT is great [for employers] because you can give your own input into the curriculum, and we can make sure that the apprentices come out with the skills we need,” explains Ms Grobler.
Despite all these efforts, Mr Tomala worries that what will happen in Swindon could be similar to communities in northern England that were impacted heavily by the closure of coal mines under Margaret Thatcher’s government in the 1980s.
“I think the long-term impact on the local economy and community is going to be absolutely devastating. The dust hasn’t settled on Brexit yet, and the [Covid-19] furlough scheme is ending in September. On top of the plant closure, the knock-on effect on the supply chain could [affect] 12,000–15,000 jobs,” he says.
Swindon’s experience with Honda’s exit acts as a cautionary tale for economic development professionals. With major industries going through heavy restructuring, divestment programmes co-ordinated among all the stakeholders are vital to provide local communities with a soft-landing and to project them into the future.
Without soft-landing and adjustment, the post-industrial decay seen in places like the Midwest in the US or the north of England will be inevitable in communities dealing with divestment.
This article first appeared in the June/July print edition of fDi Intelligence. View a digital edition of the magazine here.