ECONOMIC GLOOM SHRINKS HONDA’S MANUFACTURING OUTPUT

Honda Motors has announced today (21.11.08), that it plans to close down its car production operations in Swindon, UK for two months next year, thus halting production and affecting 6,000 of its factory workers.

It also planes to scale back US operations. This news comes fresh in the midst of the current economic downturn where Honda seeks to gradually restructure in order to strategically reposition itself responsively to be able to adapt to the current hard times shocking the industry. Falling worldwide demand has crippled the exportation of Japanese cars, especially to the United States which is Japan’s number one Japanese car importer.

The story is very much the same in different places in and around Europe and the rest of the world. In Sweden for example, Volvo has laid off 5,000 workers and cut production, German automaker BMW has sliced production by over 20,000 vehicles in its German plants; French Renault is laying off 6,000 staff while PSA Peugeot Citroën is decreasing production at three of its plants.

The motor industry globally faces extreme financial difficulties bearing in mind the high price of crude oil coupled with the lack of consumer disposable spending. Almost all major automakers have already announced their current struggle. Consumer price confidence in general and within the auto trade has dramatically tumbled due to fears of financial uncertainty and the fact that financial lenders are tightening the noose on borrowing.

Consumers are also more sensitive in these times and feel that spending their income on the absolute necessities is the only essential matter right now and for a time to come. Creating jobs and implementing a coordinated set of fiscal policies or a stimulus package to decrease taxes, in order to spur on spending again, would be welcomed.