Jump to content
House Price Crash Forum
crash2006

Currency Factor Stalls Honda Plant

Recommended Posts

Currency factor stalls Honda plant

By Chris Giles and Tim Harford in Tokyo

Published: May 23 2007 22:08 | Last updated: May 23 2007 22:08

Honda’s Swindon car plant will not receive another big investment because Britain’s refusal to join the euro has created too much currency uncertainty, Takeo Fukui, president of the Japanese car group, told the Financial Times.

The company
would not expand the capacity of the plant until currency risk was eliminated
, Mr Fukui said. But he said Honda had no plans to write off its existing investment and shut the UK plant, which supplies the European market.

Interesting. I was wondering how long Honda would remain in the miracle economy with sterling choking exports. Gordon's miracle is anti-manufacturing and it can't be much longer before it finishes off Honda and Jaguar. Makes far more sense for Honda to relocate to EE and perhaps take some EE immigrants back with them! This is a warning shot for Gordon and his miracle policies.

http://www.telegraph.co.uk/money/main.jhtm...4/cnhonda24.xml

Honda tells UK: join euro- zone or else

By Ambrose Evans-Pritchard, in Tokyo
Last Updated: 12:37am BST 24/05/2007
Honda's president Takeo Fukui has threatened to cut off future investment in Britain unless the country joins the euro, admitting that the
Japanese car producer had made an "error" building its car plant in Swindon
.
Honda's president Takeo Fukui has threatened to cut off future investment in Britain unless the country joins the euro
Takeo Fukui: 'we thought the UK was in Europe'
"The exchange rate of the pound against the euro is very difficult to forecast. Unless the UK joins the eurozone, we can't add to plant in Swindon. We're not planning to withdraw from the UK because it is a major market, and Swindon supplies it," he said, speaking at his luxurious penthouse office overlooking Tokyo.
"Swindon is close to full operation, but we made one slight mistake: we thought the UK was in Europe. Now we find that it is reluctant to join and that has become a big problem," he said.
Edited by Realistbear

Share this post


Link to post
Share on other sites
Guest Cletus VanDamme
Interesting. I was wondering how long Honda would remain in the miracle economy with sterling choking exports. Gordon's miracle is anti-manufacturing and it can't be much longer before it finishes off Honda and Jaguar. Makes far more sense for Honda to relocate to EE and perhaps take some EE immigrants back with them! This is a warning shot for Gordon and his miracle policies.

New Labour aren't interested in manufacturing. There happy to bail out christmas hamper f*ckwits, but won't lift a finger to help out industry.

Share this post


Link to post
Share on other sites

Let me just run these statements through the no-bull-o-tron decoder; aha, what he actually meant was:

"Once one of the EU accession states joins the Euro, we are out of here. Have you seen how the wages are over there?"

:lol:

Share this post


Link to post
Share on other sites
Let me just run these statements through the no-bull-o-tron decoder; aha, what he actually meant was:

"Once one of the EU accession states joins the Euro, we are out of here. Have you seen how the wages are over there?"

:lol:

Or China.

http://www.businessweek.com/magazine/conte...30/b3944003.htm

The opening of this low-cost production zone will not just change Eastern Europe. It will spark a dramatic overhaul of Western Europe's largest industry. Auto makers and their suppliers fuel a hefty 3% of Western Europe's gross domestic product, employing more than 3 million workers directly and another 12 million indirectly. Yet West European labor costs in the industry, at an average $29 per hour, are among the highest in the world. In Central and Eastern Europe, they are $3 to $6 an hour. And the competition is about to become even more pitiless as the first China-built cars from Honda Motor Co. (HMC ) arrive on Western Europe's shores. "People are waking up. This isn't about competition between Slovakia and Germany. It's also about competition between China and Europe," says VW's Schmall. "The only chance for Europe to compete against the U.S. and China is to use advantages offered by Central Europe."

Share this post


Link to post
Share on other sites

You just don’t get it; manufacturing, engineering, science, technology and design are part of the past, the new economy is based on city finance, the media and retail, the faster those who hark for the past on this forum get to grips with this new reality the faster they will leave their depression behind; I suggest some retail therapy, if you don’t have the money don’t worry, borrow it, it’s cheap to borrow these days …

Share this post


Link to post
Share on other sites

I wonder what proportion of a car's cost is the cost of the labour to produce it.

I read somewhere that it costs £2500 to make a Ford Mondeo and that the difference between that and what Ford sells them to their dealerships is (obviously) their profit and the cost of designing and researching the next model. i.e. That the costs of designing and researching the next model were far higher than the cost of producing it.

If the £2500 figure is accurate - what would labour represent? Aren't cars 'made' in about 45 minutes? Of course there is a labour element priced into each component too ... But maybe the difference between $6 an hour labour in China and $29 an hour labour in Western Europe represents only a couple of hundred bucks per car - and then they have to be transported from China too.

I guess once our 'lead' in the design and research area evaporates, it's goodbye to living standards as we know them and hello to 3rd world living standards.

Almost makes you want a socialist government to nationalise everything and keep the means of production in this country. Left to the market, there won't be an economy left in 10 years.

Share this post


Link to post
Share on other sites
Almost makes you want a socialist government to nationalise everything and keep the means of production in this country. Left to the market, there won't be an economy left in 10 years.

Rather like evangelical reconstructionists (as demonstrated by the Bush administration), the best thing to do with laissez faire Austrianists is to agree with them.

You will never get them to believe that their policies bring about poverty. You have to let them prove it for you.

It's going to be very interesting to see what happens when tens of millions of blue collar Republicans realise that the people that they have placed their trust in have been sh1tting on them and exporting their jobs to China.

When working class social conservatives in America realise that they have spent two generations cutting their own throats, we're all going to see some welcome changes.

Share this post


Link to post
Share on other sites
Or China.

The factory would be in China already if it wasn't for the fact there are restrictions on the number of cars that can be imported from outside of the EU by each manufacturer. They chose the UK because of cheap(ish) skilled labour, who are easy to hire and fire, and we are in the EU.

Honda are not alone in this. As the former eastern-bloc countries become more economicially stable and they join the Euro there will be little incentive left to run factories in the UK. Of course, over time the wages in Poland, Slovakia, etc will rise and the factories will move on to the next cheapest place.

Personally I think some quotas and tariffs are a necessary evil. We need to cushion the effects of China and the far east so we have a reasonable amount of time (i.e. decades, not months) to adjust our economies.

Edited by redalert

Share this post


Link to post
Share on other sites
Personally I think some quotas and tariffs are a necessary evil. We need to cushion the effects of China and the far east so we have a reasonable amount of time (i.e. decades, not months) to adjust our economies.

We've had a decade already to start to adjust.

The BOE have spent it raising debt, raising the cost of living and raising the cost of doing business in the UK.

Share this post


Link to post
Share on other sites

Currency factor stalls Honda plant

Honda tells UK: join euro- zone or else

By Ambrose Evans-Pritchard, in Tokyo

Last Updated: 12:37am BST 24/05/2007

Honda's president Takeo Fukui has threatened to cut off future investment in Britain unless the country joins the euro, admitting that the
Japanese car producer had made an "error" building its car plant in Swindon
.

Honda's president Takeo Fukui has threatened to cut off future investment in Britain unless the country joins the euro

Takeo Fukui: 'we thought the UK was in Europe'

"The exchange rate of the pound against the euro is very difficult to forecast.
Unless the UK joins the eurozone, we can't add to plant in Swindon. We're not planning to withdraw from the UK because it is a major market, and Swindon supplies it," he said, speaking at his luxurious penthouse office overlooking Tokyo.

"Swindon is close to full operation, but we made one slight mistake:
we thought the UK was in Europe
. Now we find that it is reluctant to join and that has become a big problem," he said.

"We thought the UK was in Europe."

What on earth does poor Mr Fukui mean by this? Obviously he must mean in the Eurozone, but Britain was not likely to ever have joined the euro and a simple bit of research would have shown that the chances of the UK joining were slim. Considering that the plant did not open for 2.5 years after the euro started, I can only conclude that they started work on the plant when it was clear that the UK was not going to join the euro, which was several years before the EU came into being. This can only be opportunistic spin by Honda.

A second piece of evidence for this would be the claim the exchange rate of the pound against the euro is very difficult to forecast. Since the euros slump after its launch and eventual recovery, it has since been trading in a fairly narrow band against the pound, in the 1.40 to 1.50 range. Hardly too difficult to predict and the sort of stability between currencies that traders hope for.

It is a pity if we lose future Honda investment, but the risks of joining the euro will far outweigh this loss.

Share this post


Link to post
Share on other sites
We've had a decade already to start to adjust.

True. Maybe it's time to keep the existing tariffs and stick a few more on for good measure (hint to any legislators out there: an eco tariff on the transport of goods is a soft juicy electorate-friendly target).

The BOE have spent it raising debt, raising the cost of living and raising the cost of doing business in the UK.

I won't give you any arguments there. I've been running a small business for the last 10 years and I am making about the same now after all taxes as I was when I started in 1997, I am turning over 20% more, but have to give more money to our glorious government so they can ask me to fill out even more forms next year (oh and fight dodgy wars in the middle East :ph34r: )

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 355 The Prime Minister stated that there were three Brexit options available to the UK:

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.