The news that Honda is to close its vehicle manufacturing plant in Swindon in 2021 has come as a huge blow to workers and to the local area as a whole. The site, which was established in 1985, and which currently produces around 160,000 cars per year, employs around 3,500 workers, all of whom are set to be laid off.
According to Honda, the decision has been made because of its “commitment to electrified cars, in response to the unprecedented changes in the global automotive industry,” though of course there has also been much speculation as to how much the current uncertainty around Britain’s political and economic future played a part in the decision. Either way, the decision means that unless alternative arrangements can be made, several thousand workers will find themselves without a job, with the economy of the Swindon and surrounding area suffering greatly.
At present, there seem to be three plans being mooted as a way forward. Plan A is for the Government to persuade Honda to reverse its decision, with recent reports saying that the Business Secretary, Greg Clark, will soon travel to Japan to meet with the organisation’s President, Takahiro Hachigo, to potentially offer financial assistance for the firm to remain in Britain. Failing that, according to a motion put forward by Swindon Borough Council and trades unions, Plan B is to find another car manufacturer to take its place, or if this proves impossible, Plan C is to try to attract a “similar industry” into the area:
“The priority for all parties is to work together to persuade Honda Japan to keep the plant open. Acknowledging that there is a future for car manufacturing on the Swindon site, the back-up plan must then be to find an alternative car manufacturer or comparable industry for this first-class manufacturing facility.”
What are the potential effects on the Swindon economy?
In terms of what the closure might mean for Swindon and the surrounding area, clearly the loss of 3,500 jobs in this industry will also have a knock-on effect on other industries. This includes those industries that directly supply it, those that supply the suppliers, and also other industries in the wider economy that suffer because there’s now less money being spent. Of course, some of those workers will get jobs in other industries, but if we just assume the loss of 3,500 jobs and look at the multiplier effects on other industries, we can get an idea of how devastating this could prove for the Swindon economy.
The following chart shows estimated job losses in all industries (at the 1-Digit SIC level) within a 40-mile radius of Swindon, as a result of the closure:
As you can see, the loss of 3,500 jobs at Honda would actually lead to a loss of around 7,900 jobs in total throughout all industries. In terms of Gross Value Added (GVA), we estimate that for the 40-mile radius around Swindon, the initial loss of 3,500 jobs would lead to a loss of £223m, but if we include total job losses in other industries as well, the total loss could equate to £426m.
Compatible occupations for Honda workers
Assuming that the Government is unable to persuade Honda to remain in Swindon, and that attempts to encourage other car manufacturers or even other similar industries to come into the area are unsuccessful, how could local skills agencies work to help these employees find new positions?
The first port of call is to look at the actual workforce, in order to find out the variety of different roles that are performed. According to our data, the Top 20 occupations within the industry in the Swindon area are as follows:
Each one of these occupations has its own skillset which, although unique to the job, will have elements that are relatively closely aligned with other occupations. In the following three graphics, we have taken the Top 3 occupations from the table above, and using O*NET (a US skills database that we have adapted for the UK), we have identified the 10 most important hard skills for these jobs:
Having identified these skills, we can then compare them with the skillsets of other occupations to find those that are most compatible. For instance, the table below shows the ten closest occupations to Metal working production and maintenance fitters in terms of skillset, together with median wages, and estimated annual openings for these jobs within the 40-mile radius of Swindon (note, the Compatibility Index is measured on a score of 0-100, and so the occupations in the table, which all score in the 90s, can be said to have very close skills compatibility with this occupation):
Of course we are only scratching the surface by looking at one occupation, but the point is that through a detailed skills analysis of the actual occupations that are set to be lost, and a comparison with the skillsets of other occupations to find those that are closest, it is possible for those who have a remit to try to find new employment for those workers who lose their jobs to better understand which occupations they might most easily transfer to, and where there might be a need for upskilling.
Compatible industries that could be encouraged to move into the area
One final thing we can consider in this brief analysis is the question of similar industries that could be approached, if talks with Honda and other car manufacturers prove unfruitful. Clearly the answer is connected with the type of workforce that the Honda plant has, and we can begin to answer the question by looking at which industries are most compatible with those skills.
The way our data is produced enables us to do this, by identifying which industries particular occupations are employed in. So for example, if we look at one of the key jobs that is set to go with the Honda closure — Assemblers (vehicles and metal goods) — we can identify other industries where this occupation is also employed. The chart below shows the Top 15 industries that employ this job, with the percentage of each industry that is made up of this occupation shown:
What this insight shows is that there are a number of other business that might be encouraged to move into the area, given that there is a ready workforce for them. A great example of this in action can be seen in the case of Detroit (which we wrote about here). Despite huge losses in jobs in the automotive industry, plus a filing for bankruptcy in 2013, economic developers in the area were able to attract new business by — amongst other things — articulating the nature of the skills-ready workforce within the area.
The news from Honda will have come as a devastating blow to its employees, and as our analysis above shows, without a tangible solution to the problem, the knock-on effect in terms of loss of jobs in other industries throughout Swindon and the surrounding area will also be a huge blow. However, as our analysis also shows, there are two potential silver linings to this cloud.
The first is that by identifying the skills of Honda employees, skills and job agencies in the area can match these skills to other compatible jobs, in order to help people get back into work, and to given them an understanding of where they may need to upskill.
The second is that Swindon clearly possesses the kind of skilled workforce that other industries in the country, or internationally, could benefit from. By identifying the industries that these skills are most compatible with, the local LEP, together with other agencies, can develop a far more focused and targeted campaign to approach the sorts of businesses that are most likely to be attracted to set up operations in the area.
If you would like to know more about we can help you identify the skills of the workforce in your area, and the industries that are most compatible with these skills, get in touch.