Honda Hit Hard By Global Economic Downturn
by Shaun Parker
That pesky recession! Who does it think it is, coming over here, taking our jobs, hitting everyone in the pocket, grabbing all the headlines, making the lives of us Brits a misery? The best way for Britain to cope with the dire straits that is the recession, is to put on a brave face. Britain may not be the best in the world at many things these days, but one thing we are good at is having a laugh in the face of adversity.The latest news that one of the world’s largest car manufacturers, Honda, are to stop production at their British factory in Swindon for the next four months, affecting 75 per cent of Honda’s 4,000 strong British factory workforce.
Honda’s global third quarter net profit has dropped by a staggering 89 per cent, and even though Business Secretary Lord Mandelson announced a government support package for the UK car industry which could be up to 2.3 billion pounds, the Japanese car giant has had to go ahead with the longest factory shutdown in recent history.
Many car manufacturers have had to make cut-backs in production simply because demand for brand new cars during these difficult financial times is way below levels of supply - Honda dealers have not experienced such a slowdown in turnover that something just had to give and it makes perfect business sense to cut production, sit back and reflect on how the next quarter pans out.
Despite Honda stating that they jobs are safe, it is common knowledge that over a quarter of factory staff have taken up voluntary redundancy, perhaps as they see no end to the gloom and doom in the near future.
Fears that the halt in production in Swindon may continue past the next four months have been dispelled, or at least there lies some hope, as Honda are going ahead with part orders - a measure that they surely would not take if they felt that production would continue to stop for an even longer time period.
Honda usually produce 240,000 cars from their Swindon factory, but that figure will halve over the course of the next year and elsewhere, global production will be slashed by 56,000 units. Honda is yet to announce whether employees from their other business sectors and departments in the U, such as Honda dealers and administration staff will be affected during the next year, which finance experts are saying will continue in recession, possibly through to 2010.
Honda dealers have obviously experienced a slowdown in business, both in the sale of brand new vehicles - the bread and butter, where the highest margins are made - and also used cars from Honda dealers.
Figures are set to continue to decrease for the duration of 2009 as Honda economists have forecast a net profit for the year to March 2009 to be less than half of its earlier forecast of 185 billion yen. The company’s net profit for the quarter ending December 2008 was 180 billion yen below the mark reached during the same quarter the previous year - a staggering example of just how badly affected the car industry has been since the global economy took a nosedive.
The Swindon factory workforce will obviously be concerned, but will no doubt be putting on a brave face, in true British fashion. Let’s hope, like the global economy, their fortunes can change over the next year.
