Honda to cut 800 UK jobs on falling European demand

Japanese carmaker Honda <7267.T> plans to cut around 800 jobs at its plant near Swindon in southwest England due to falling demand for its vehicles across mainland Europe.

The company, which makes the Civic, Jazz and CR-V models at the South Marston plant near Swindon, said on Friday it would enter into formal consultation with staff over the cuts which would likely take place in the second quarter of 2013.

Carmakers are trying to scrap underused factories and cut surplus jobs that are fuelling losses in Europe as demand for cars in major markets like France and Germany flounders.

Honda employs some 3,500 staff at the South Marston plant, which produced around 150,000 vehicles last year. The plant has the capacity to make 250,000 cars annually.

Last year Honda expected a surge in demand and hired 500 workers and invested 267 million pounds ($430 million) in the Swindon plant.

However, the expected increase in demand failed to materialise, with Honda's sales in mainland Europe, especially Spain and Greece, falling by around a million in the past year.

Ken Keir, Honda Motor Europe's executive vice president said the company needed to "realign the business" but was committed to Britain for the long-term.

"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 Keir.

Late last year U.S. carmaker Ford announced plans to cut 1,400 jobs at plants in southern England and end vehicle manufacturing in Britain due to weak European sales.

Ford and Volvo are also planning to cut thousands of jobs in Belgium, while PSA Peugeot Citroen's has plans to cut its workforce in France.

Honda said its sales in Britain remained strong and that it had long term confidence for both manufacturing and sales in the country.

British union Unite said Honda executives revealed they would look to cut 420 managers and supervisors, and 360 production workers on top of 325 agency positions that had already been scrapped in recent months.

"This is a hammer blow to UK manufacturing ... it's a disaster for manufacturing in the UK and for the local economy," said Unite national officer Tony Murphy.

Britain's car industry has been a bright spot in a country grappling with a faltering economy, especially after Vauxhall's car plant at Ellesmere Port in north-west England escaped closure last year after securing work to build the next generation of Astra cars.

New British car registrations rose 5.3 percent in 2012 to 2.04 million - the highest level since 2008, the SMMT car industry body said on Monday.

Honda said it would continue to build cars and engines in Britain with the Civic Estate and the Civic Type R models due to be manufactured in Swindon from 2014.

($1 = 0.6209 British pounds)

(Editing by Kate Holton and Helen Massy-Beresford; Editing by Elaine Hardcastle)