Background:  

Honda needed to make drastic cut backs in costs, while maintaining their ability to take advantage of future market improvements. While they have been criticised by Unite for not consulting with their workforce, they have offered staff a variety of responses, and crucially ensured that these feel fair through sensitive approaches such as requiring Managers to take a greater percentage pay cut than workers.

Approach:

HUM director David Hodgetts said: "The European car market is not showing any signs of recovery yet and therefore we have to reduce our production output further to better match the current level of market demand.

"All other car manufacturers are facing a similar situation and we will continue to take prompt and flexible countermeasures to ensure that we can meet these challenges with this severe market situation.

"We intend to utilise the period of non-production days to further strengthen our competitiveness to take advantage of future market improvements."

What Happened:

Over 1,000 of Honda's 4,800 workers took redundancy and 800 temporary staff were let go in January 2009. Honda closed the Swindon factory entirely for 4 months, putting staff on 60% pay. Following this move, economists started calling the effect on the economy of stopping production and using up stock "the Honda Effect".