Honda will cut 800 UK jobs on falling European demand

Honda plans to cut about 800 jobs at its plant in Swindon, southwest England, due to falling demand for its vehicles across Europe. It is the first time Honda has cut jobs in the UK since it began car production there in 1992.

The cuts will not affect Honda's future car and engine production plans in Swindon, a Honda spokeswoman in the UK told Automotive News Europe today. The automaker will start making the new Civic wagon and high-performance Civic Type R variant in the UK starting in 2014.

The plant, which also produces the Civic hatchback, Jazz and CR-V, employs 3,500 people. The cuts, which will start in the second quarter of 2013, will "affect both office-based and production-based staff, but it is difficult [now] to see where that split will be," the spokeswoman said.

Despite the cuts, the automaker remains fully committed in the long term to its UK and European manufacturing operations, Honda Europe Executive Vice President Ken Keir said in a statement, but added that market conditions in the region "require us to take difficult decisions."

According to Honda, about 166,000 cars were built at the plant in 2012, well below the factory's maximum capacity of 250,000 and far from its 2008 production peak of 230,000 units. Swindon's 66 percent capacity utilization rate is also below the 75 percent to 80 percent level industry experts say is needed for a factory to break even.

Europe losses

Mass-market carmakers in Europe are struggling with underused capacity in the region, which is fueling losses in Europe as demand drops for cars in major markets such as France, Italy and Germany.

Late last year, Ford announced plans to cut 1,400 jobs in southern England and another 4,300 positions in Belgium. Additionally, both PSA/Peugeot-Citroen and Opel plan to cut their staff as they shut plants in their home markets.

Honda's European sales fell 6 percent to 131,348 in the first 11 months of 2012, according to data from the industry organization ACEA. Overall sales in the region were down 7 percent during the period.

Reuters contributed to this report