Dive Brief:

• Honda plans to close its plant in Swindon, England, at the end of its current production cycle, which ends in 2021, the automaker announced Tuesday. The automaker will move its operations to Japan.
• "In light of the unprecedented changes that are affecting our industry, it is vital that we accelerate our electrification strategy and restructure our global operations accordingly. As a result, we have had to take this difficult decision to consult our workforce on how we might prepare our manufacturing network for the future," Katsushi Inoue, Honda's Chief Officer for European Regional Operations, said in a statement.
• The plans to close the plant, which produces 150,000 cars per year and employs about 3,500 people, come weeks before the deadline for the U.K. government to agree on a Brexit withdrawal treaty and as other manufacturers, including Nissan and Dyson, similarly move operations away from the U.K.

Dive Insight:

Honda did not blame Brexit for its decision in its public statement, instead saying a shift in focus to electric vehicles meant the U.K. operation's "current role as a global manufacturing hub may no longer be viable."

Bruce M. Belzowski , the managing director of automotive futures at the University of Michigan, agreed this "is not a simple Brexit response."

Honda has struggled in Europe for a while, and the potential for a no-deal Brexit to add higher costs to their operations "make the factory untenable," Belzowski said in an email to Supply Chain Dive. A new trade deal between the European Union and Japan means it will be easier for Honda to produce cars in Japan and export them to the EU at a lower cost, he said.

"Having said all that, it is not an easy decision to close a plant because the company put billions of dollars into building it and developing its supply chain," he said. "Companies do not take this lightly, so the decision to close a plant has to be rooted in long term, significantly poor sales," he said, adding that higher costs associated with Brexit "may have been the tipping point."

The Swindon plant began operations in 1986 and currently produces the Civic Hatchback and Civic Type R. The cars rolling off the factory floor at this location are exported to more than 70 countries, according to Honda.

Unite the Union, the group representing the employees at the shuttering plant, said it is going to "examine the business case for the factory’s future."

"While Brexit is not mentioned by the company as a reason for the announcement, we believe that the uncertainty that the Tory government has created by its inept and rigid handling of the Brexit negotiations lurks in the background," Unite National Officer for the automotive sector Des Quinn said in a statement. "If the government had delivered a strong and stable Brexit that protected the economy and jobs, we may well have been in a very different position today."