Hundreds of jobs at risk as Toyoda Gosei plans on leaving the UK

Hundreds of jobs in the car industry have been placed at risk after car part manufacturer, Toyoda Gosei has announced that it plans on pulling out of the UK.

The firm owns plants in Swansea and Rotherham in South Yorkshire which employ a total of 458 people.

The company itself specialises in the production of car components for firms such as Toyota, Nissan, Renault and Honda, a rather highly skilled industry due to the limited labour supply.

The firm had stated that its decision to leave the UK is in response to changes in the global sector, as well as a significant reduction in UK customer demand.

These changes are most likely attributed to the economic changes associated with Brexit, the car part manufacturer likely believes that Brexit will make the UK much less competitive on an international scale.

This is because of the increased costs associated with goods passing through the UK, EU border after Brexit.

Also, the reduction in UK customer demand for vehicles may either be attributed to the coronavirus as individuals incomes have decreased meaning luxuries such as cars cannot be afforded, or, UK consumers may have started to favour other brands such as ones manufactured in Europe.

Toyoda Gosei has begun a formal period of consultation with its employees, 207 of which are stationed at the Swansea site and 251 in Rotherham at the company’s UK headquarters.

"We understand and regret the uncertainty that this will cause for everyone at the Swansea and Rotherham sites and are doing all we can to support our employees throughout the consultation process," said Toyoda Gosei UK (TGUK) managing director Shigenori Matsuo.

If the firm does leave the UK entirely, including all of its plants not just headquarters, the remaining unemployment within the Swansea and Rotherham regions will likely be devastating.

This is because some of these regions, especially Rotherham, may experience further economic fallout which will come as a result of the collapse of the steel industry, if Toyoda leaves, there may be a similar, perhaps more painful effect on the local region.

This is because highly skilled workers will lose their jobs, leading to a massive reduction in their disposable incomes.

This means these individuals may be forced to resort to consuming inferior goods, such as food with preservative content to save money, may be forced to start using food banks to sustain themselves and to make ends meet.

This will have a terrible effect on the local economy within the Yorkshire region as poverty levels will rise which may also place additional strain on the government as it will have to allocate more resources towards claimant count payments.

Furthermore, because the unemployment is structural, loss of industry due to a reduction in demand, these highly skilled workers who are specialised in car production may not be able to find another job within their desired skill range as the industry has collapsed, thus leading to a large amount of unemployed or underemployed resources within the local economy.

The firm has already received £116,000 from the Welsh government's Economic Resilience Fund (ERF) in December 2020 to help safeguard jobs against the effects of the coronavirus pandemic.

So, if the firm leaves, the UK government will likely be forced to spend additional resources to ensure that some workers remain protected.

However, this is only necessary if the entire company leaves as it may only be the firm’s headquarters which will be moved to another region.

This is mainly because the costs associated with moving an entire operation are simply too high, capital does not so flexible and it does not like to move across the entire globe, the cost and risk are simply too high, therefore, if only the headquarters are moved, the economic fallout will not be as painful.

Nevertheless, the UK government should be prepared so that if painful unemployment does occur, these workers can go back to work in a different industry, such as renewable energy production.


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Written by Hubert Kucharski


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