1. Will the Minister make a statement on the effect of Honda’s decision to close its factory in Swindon on the supply chain in Wales? 281

Diolch. Wales-based suppliers to the Honda Swindon facility will of course be impacted by this devastating news. Our officials, together with the Wales automotive forum and the UK Department of Business, Energy and Industrial Strategy, will be working with these companies, utilising all available resources to help.

Diolch yn fawr iawn. This clearly is a worrying announcement for us. It's thought, I think, that around a dozen companies are direct suppliers, including Kasai—200 workers in Merthyr Tydfil—Toyoda Gosei in Gorseinon—600, I think, there—Mitsui in Ammanford—over 100. It's a very long list and, of course, those companies have their own supply chains as well. So, there's a knock-on. Some companies, no doubt, will be able to transition to new customers, given the relatively long run-in to the Swindon closure. But, certainly, many will find it very difficult to replace their Honda deals, especially if those contracts form a large proportion of their total work. So, could the Deputy Minister outline the nature of the work that will be ongoing now with the sector to assess the impact of the Honda announcement, and outline what kinds of support packages are being considered for development by the Government at this stage? Could he tell us what specific support is being investigated to assist with transition to new contracts, and also transition to new vehicle technologies, including new generation propulsion? Because, in fact, much of our expertise here is in the electronics—in the chips and so on—that could be the smart foundations of a future automotive industry in the UK—an industry that is threatened by Brexit, of course.

Now, while Honda say that their decision is not because of Brexit, there is plenty of evidence to show that uncertainties and nervousness about Brexit have been a significant factor in some decisions taken by car and component makers to de-invest in the UK in recent months. There are, of course, plenty of warnings about the catastrophic consequences of a 'no deal' Brexit for carmaking in the UK. Now, the Deputy Minister will have read reports, as I have, of a fund—code-named 'Kingfisher' by the UK Chancellor—to bolster the economy in the event of a 'no deal' Brexit. Now, were preparations for Brexit transparent, as they should be, I'm sure that the Treasury would already have been having conversations with Welsh Government about how such a fund could work in Wales, what the priorities would be, and so on. I'm not holding my breath, but I'll ask, nonetheless, what discussions may have taken place. Specifically, what level of funding might be available from Kingfisher, or any other fund, for that matter, for the automotive industry in Wales? Also, does Welsh Government expect to have any influence over how those funds are spent? Also, how can different companies and different sectors, including automotive, be expected to access those funds?

Thank you. In fact, there are 18 Wales-based companies in the Honda supply chain. For the majority, Honda accounts for less than 10 per cent of their total business, but there are three companies—all of which are Japanese-owned—where Honda accounts for 80 per cent of their business. There is one other company, also Japanese-owned, where Honda accounts for nearly 50 per cent of their business. Of course, this announcement will not come into play for three years, which does give us some time to work with the companies to find alternative markets. In the meantime, the companies are still expected to meet their contractual requirements to Honda to work at capacity. So, we're not expecting any immediate redundancies, and we do have three years to assess the options available to us. And it's encouraging that Honda are inviting the companies to bid into their new model. There is a range of dialogues going on with the companies and with the UK Government. Officials were part of conversations yesterday in London with the Department for Business, Energy and Industrial Strategy. Again, they're there today taking part in a summit—the inaugural Honda taskforce, chaired by Greg Clark—so we're in full dialogue with the UK Government in working out how we can respond to this.

Were it to come to the pass where redundancies will happen, of course, we have the ReAct programme where we are now, sadly, well used to putting in place a package of measures, including Careers Wales and Jobcentre Plus, and support in place to help companies adapt and for workers to retrain, but we're not there yet.

In terms of the broader picture, the Member is right—there is, of course, a confluence of factors at play here. Brexit is undoubtedly a factor, as the cost of exporting to Europe could well increase significantly after the end of next month, but it's not the only factor. This is a factory that has not been operating at capacity for some time. There's a drop in global demand for cars. There's a move away from the standard engine towards electric vehicles. There are environmental concerns and, of course, there is the dropping of the tariff, making it cheaper for Japanese companies to export from Japan into the rest of the world. So, there are a whole range of interventions.

In terms of the specific question on Brexit, we did have a meeting of the Cabinet sub-committee on Brexit preparedness this morning, which I can tell Members was a fairly sobering affair. There are, of course, dialogues going on of how we can help each individual industry. We would encourage all manufacturing companies to take advantage of the Brexit portal, which is the central source of all advice for how to adapt. We are concerned that, certainly amongst small and medium enterprises, too few are engaging. Having taken part in a round table with business groups last week, there is a feeling amongst small businesses, in particular, that Brexit will be sorted out in some way, something will turn up, and they needn't worry too much about it. There are a number of organisations who are engaged and have accessed our Brexit preparedness fund, which has been maxed out, and we have now released extra resource to make sure that there is further support available for businesses. 

Well, of course, Honda has confirmed that Brexit wasn't a driving force behind their decision, but it was largely driven by the industry's move to electrified vehicles, and they have said that they will focus activity in regions where it's expected to have high production volumes of electric cars. So, I am concerned that we are behind the curve here in Wales. We know that the Scottish Government—or, certainly, my view is that the Scottish Government is much further ahead when it comes to developing infrastructure and supporting that technology. Now, some councils, I'm aware, haven't even started to bid for funding to install EV charging infrastructure, preferring to wait for market demand.

So, just to briefly focus my questions on this, what is the Welsh Government doing in terms of working with local authorities and also working with regional economic plans to ensure that this area of electric vehicle and new technology is being taken forward? And what is the Welsh Government doing to demonstrate to companies like Honda and Ford that Wales is a place that makes innovative infrastructure investment decisions and takes new technologies seriously?  

Thank you. I think that's a little bit of a stretch to try and link those two issues together. We do have a £2 million fund, which we've agreed jointly with Plaid Cymru, to roll out electric vehicle charging. On the point of Brexit not being a deciding factor, I think, again, the Member is stretching credibility a little. This morning—

That's what they said. I'm quoting what they said. 

This morning, the former ambassador to Japan, Sir David Warren, has said that it is fanciful to claim the decision was not related to Brexit. At the end—[Interruption.] I'm having heckles from the Conservative benches. Their anger would be better directed at their own Government who are failing to provide certainty for businesses about what the trading environment is going to be at the end of this month.

You listen to businesses—they support the Prime Minister's deal.

I am listening to businesses, who are telling us that at the end of this month, they could well be facing a tax of £400 on every engine, on top of non-tariff barriers, if we don't get a good deal, which will disrupt the whole just-in-time business model that the car industry relies upon. So, the Conservative benches are living in fantasy land if they think that the uncertainty around Brexit is not a factor in every decision that every multinational company is making at the moment.

Minister. I can well understand why the UKIP and Conservative Members want to bury their heads in the sand about the devastation that Brexit is causing on a daily basis to our manufacturing jobs. I am desperately worried about my automotive plants in Torfaen. We have hundreds of well-paid workers working in automotive supply chains whose jobs are all now at risk, not just from a 'no deal' Brexit, but also they recognise that there is no deal as good as the deal that we've got now for our manufacturing.

Can I ask what discussions you've had specifically with automotive plants in Torfaen to ensure that, as best we can, we can prepare for this catastrophe that seems unstoppably to be heading down the track towards us?

Thank you. The Wales Automotive Forum is seeking early engagement with all the companies—all 18 Wales-based companies in the Honda supply chain—to understand the positions they're in and how the Welsh Government can help mitigate this loss. As I say, we have a suite of interventions available and we do have three years. There are going to be no major redundancies from this announcement, the factories will continue to have their order books guaranteed under their contracts for the next three years, and we will then have time to help them to prepare. But, of course, this is a fast-changing environment in terms of the way the car industry is developing. The automotive sector and the aerospace sector are undergoing profound changes to their industries, which makes it all the more important that we have a stable framework of regulation and law and trading arrangements through a good deal. And I agree with the comments that Lynne Neagle has made—it is fanciful, as the former ambassador to Japan has said, to claim that the decision is unrelated to Brexit. Brexit clearly is not the only factor, but it is, nonetheless, a factor for all companies who are trading in the international environment at the moment.

Well, it's fanciful for the Minister to try to link this to Brexit, because Honda are closing their production line in Turkey, which is inside the customs union. So, this has absolutely nothing whatever to do with Brexit, as the company itself has said. It has everything to do with the EU's policy and the UK Government's policy and the Welsh Government's policy on phasing out diesel. Because since 2006, the demand for Honda's cars of all kinds in Europe has fallen by 50 per cent, and demand for the Honda Civic, which is in question, had fallen by nearly two thirds, and that's directly related to the dieselgate scandal and the legislative changes that have been made as a consequence of that. So, I'm afraid to say that the businesses and individuals who are suffering, or will suffer as a result of this decision can point the finger of blame most closely at the Welsh Government, the UK Government and the institutions of the European Union that are in the process of destroying the market for diesel cars in their own back yard. The demand for diesel cars last year alone fell by 30 per cent. The idea that the decision to close these production lines within the European Union or within the customs union are anything to do with Brexit is nonsense. They're everything to do with the deliberate policies, job-destroying policies, of the EU.

It's worth remembering that Neil Hamilton made very similar arguments to argue against the phasing out of leaded petrol. He has been consistently wrong on protecting consumers and protecting vulnerable people from polluting vehicles, and he seeks to point the blame everywhere but at the reckless policy he has pursued to destroy jobs on the back of lies about what the impact of withdrawing from the EU would achieve.

Stick to the facts.

Neil Hamilton points to the fact that Turkey is also closing its plants. That is what happens when you have free trade deals; there are consequences both ways. We've undertaken a trade deal with Japan that makes it cheaper for Japan to produce its cars in Japan, and that's the way free trade works. Outside of the protection of the EU, we're going to be more vulnerable to changes in international conditions.

Neil Hamilton dismisses the expertise of the former ambassador to Japan, who himself has made the link to Brexit, and I think it's naive—. I'm not saying that this is the only factor, but he's naive to think that companies that rely on trading goods—. And bear in mind that just 10 per cent of the 160,000 cars produced by Honda are sold in the UK, these are—. These are—I see Michelle Brown is busily taking photos; the—[Interruption.] It's just a shame she didn't have more important things to do—[Interruption.] These cars are being sold for export to the EU and the potential costs of exporting rising is clearly going to be a factor in the decisions that they make.

Minister, you'll be aware that Kasai in my constituency is a large automotive operation employing around 200 people, as Rhun ap Iorwerth has already mentioned. Now, they provide a very unique and revolutionary manufacturing process—the first of its kind in Europe, in fact, which has been largely responsible for its success and its ability to be able to secure contracts with companies like Honda and Jaguar Land Rover, which both account for a large part of its business.

Now, as you've already said, at this stage, we don't know what the impact of the Honda announcement in Swindon will be on Kasai, but in the worst case scenario, it's possible that jobs will be lost, and the impact on an area like Merthyr Tydfil on the back of recent job losses in St Merryn Meat and the proposed transfer of 200 plus Department for Work and Pensions jobs out of the town can't be underestimated. Now, I'm grateful for the information that you've already given in previous answers, but I'm going to be meeting with Kasai management tomorrow, with Gerald Jones MP, and it would be helpful if, in those discussions, we were able to provide some more reassurance about Welsh Government's ability to support them through what could be a difficult period, should they need to explore alternative markets and contracts to secure their long-term future in Merthyr. Because I'm assuming that Kasai, like many other companies, will be in a position where they're going to need to get over a hump; they don't want to lose jobs while they're doing that, while they're out in the market looking for alternative business. They may need to be developing alternative skills within their workforce to compete in different automotive markets. So, what particular support and assistance would Welsh Government be able to give a company like Kasai in that process of getting over that particular hump in terms of delivering their future security?

Thank you. Yes, I'm aware of the position at Kasai and the 200 jobs. As I said, there'll be no immediate redundancies in any of the plants, as this announcement will not take effect for three years, and we will be working with the companies in the meantime to help see how we can support them to find alternative markets. Kasai, as Dawn Bowden said, produce the inner door panels for the Honda Civic and have a specific skill set, and Honda are going to be inviting all the companies affected to bid in for the new models that they are going to be producing. So, the Wales Automotive Forum will be engaging with the company to see how we can work together to provide a future for the plant in Merthyr Tydfil.

I'm sure it hasn't escaped Members' attention that the Ford factory in my own region has imminent job losses of up to 1,000 potentially in the pipeline. You mentioned earlier, Deputy Minister, that the situation at Honda is not going to become acute until 2021, that means there are two years when Welsh Government could be working not just for Honda, but for Ford and their supply chains to make sure that we get the best out of what is really a disastrous deal all round. 

The second thing I wanted to ask you is: last week, we heard from Jeremy Miles that the Minister for international affairs was working hard on promoting the automotive sector, which included supply chains, across the world, and I wonder if you've got any update on what exactly that is looking like. Thank you.

The First Minister and the Minister for the economy met with the UK chair of Ford last week to see if we could provide any further help and assistance. Clearly, the situation they face is serious, and they too, like Honda, are facing the changing nature of the automotive sector and the confluence of different forces that have come together at the same time to cause difficulties for the various companies in the sector. The conversation there reinforced the fact that the creation of trade barriers and non-trade barriers in the export market was a very real factor in their decision making. In terms of the work the Minister for international affairs has been doing in promoting Wales, I will certainly ask her to update you on the progress in that, but I can assure you that we're all working together to try and mitigate the impact of Brexit and help the sector to become more resilient in the face of considerable change.

I thank the Deputy Minister.