Honda Motor Europe (HME) announced on Friday it is cutting 800 jobs at its UK plant in Swindon, citing “sustained conditions of low demand in European markets”.

Axing the 800 jobs by next spring would “ensure the long term stability of its future business”, the automaker said in a statement.

“Sustained conditions of low demand in European markets make it necessary to re-align Honda’s business structure. As such, Honda of the UK Manufacturing (HUM) will enter into formal consultation with its associates [workers] to consider these changes and the proposal that it will reduce the workforce by 800 associates by spring 2013,” the company said.

“Honda remains fully committed for the long-term to its UK and European manufacturing operations. However, these conditions of sustained low industry demand require us to take difficult decisions. We are setting the business constitution at the right level to ensure long term stability and security” said HME executive vice president Ken Keir.

The BBC reported HUM had begun a 90-day consultation period on the job cuts and had said it hoped to avoid compulsory redundancies.

The plant, opened in the early 1990s to build the Accord after an earlier European manufacturing alliance with the Rover Group ended, currently builds the Jazz (Fit) and Civic hatchbacks, the CR-V SUV and many of the engines used in the cars. The Jazz, Civic and CR-V are sold mainly here in the UK and Europe while some Civic models and the diesel CR-V are shipped to Australia; the plant also shipped a previous generation CR-V to the US.

But the factory has had its ups and downs in recent years.

Workers faced four months of closure and voluntary layoffs in 2009 soon after the global financial crisis at a factory whose peak was 5,000 workers and 240,000 units a year until then.

Last 30 April Honda added a second shift in Swindon’s Car Plant 2, as announced the previous December. That new shift added 500 new jobs and took the total workforce to 3,500 with production forecast to double to 180,000 units in 2012 – the total was actually 166,000, well up on the 97,000 made in 2011. In 2008, 230,000 were completed.

Plant capacity is 250,000.

Last October, HUM said it would not, however, build the next generation Jazz from 2014 “to benefit from production economies of scale and fully [use] Honda’s global production resources”.

The entry level model for Europe, previously sourced from Japan, China, Japan again and, finally, the UK, would be built “outside of Europe” but HUM did not say if this would be a return to Chinese sourcing – the first generation initially came from Japan, replacing the Logo, then was switched to the then-new export-only joint venture Honda Automobile Company China joint venture – or Suzaka in Japan.

At a Paris motor show media preview day in September, HME president Manabu Nishimae announced the launch of two new Civic-based models; the latest Type R sports hatchback and the reintroduction of the Civic wagon, a five door model, reviving a variant last offered when Honda and Rover shared the design of the European Civic and Rover 400.

Demand for Honda cars in Europe had fallen in the past year but the automaker insisted it was still committed to manufacturing in the UK and Europe in the long term.

In the first 11 months of 2012, 131,346 Hondas were registered in Europe, down 6.2% year on year, according to industry group ACEA.

New car sales have fallen dramatically in Greece, Portugal and Italy while there have been lesser drops in the top markets of Germany and France.

Outgoing Society of Motor Manufacturers and Traders (SMMT) chief executive Paul Everitt said in a statement HME’s announcement was “very disappointing news for Honda staff and their families.

“The decline in European new car markets and uncertain growth prospects has forced a number of vehicle manufacturers to restructure their operations.”

“Despite challenges brought by weak European demand, the longer-term prospects for the UK automotive sector remain good. The industry has seen GBP6bn of new investment from a wide range of global vehicle manufacturers during the last two years and there is demand for skilled workers in the automotive industry and other high value manufacturing sectors.

And, notwithstanding the Honda announcement and the continued weakness of the European market, the UK automotive sector was still in good shape with strong demand for products from Jaguar Land Rover, Nissan, Mini and Toyota, the outgoing SMMT head insisted.

Everitt added: “We hope that those affected will be able to take advantage of the opportunities we know exist throughout the UK sector and its supply chain.”

SMMT data out this week showed that new car registrations here in the UK rose 5.3% year on year in 2012 to 2,044,609 cars, the highest tally since pre-credit crunch 2008.

Honda volume rose 7.2% to 54,208 cars. About 40% of the cars produced in Swindon are sold in the UK.

Late last year Ford announced plans to cut 1,400 jobs at plants in southern England and end vehicle manufacturing in Britain. Ford and Volvo are also planning job cuts in Belgium while PSA Peugeot Citroen is cutting its workforce in France.

Honda spent GBP267m (US$430m) on its British operations ahead of the launch of the new Civic late last year.

The BBC noted that UK business secretary (minister) Vince Cable visited Honda last September to welcome the latest investment in the UK.

“This Honda story is part of a much bigger picture of optimism, of feeling that Britain is a really good place to manufacture and make cars,” he said at the time.

Additional reporting: Chris Wright

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