Honda Motor Europe is cutting production at its plant in Swindon, England, by 14.5 percent this year - but it is not blaming the strength of the British pound.
Honda defended the decision amid controversy in the UK over jobs lost because of BMW's sale of Rover Cars. BMW said the exchange rate between the pound and other European currencies had made exports from UK factories prohibitively expensive.
Honda said it is installing a new manufacturing system at its Swindon factory to boost efficiency and flexibility. It is also preparing to replace the current Civic with a new model later this year.
Honda said it would build 100,000 units in the UK this year, compared with a 1999 production total of 114,500 units. Despite the decrease, Honda said it is still targeting European sales of 250,000 units this year, up from 210,000 units in 1999.
However, Honda did blame 'market conditions' for a slump in demand for the Accord and the Civic in the UK.
Despite the 2000 production slowdown, Honda said it expects European sales to increase to 300,000 units in 2001 when its second factory alongside the current facility in Swindon begins building cars. It plans to hire 1,000 new workers to man the new plant, bringing the employee total in the UK to 4,000.
With an increased capacity of 100,000 units, the second plant will boost Honda's European capacity to 250,000 units.
The second site will build Honda's new supermini for Europe as well as the Civic.
Honda is also considering building its CR-V sport-utility, in Europe, but has not reached a final decision.