Inward investment and Industrial location in an MEDC

Honda - Swindon

Background

Honda is a multinational (MNC), or transnational corporation (TNC). Transnational corporations are companies that have operations in several countries and they dominate the hi-tech industry. Honda is based in Japan and has factories and showrooms throughout the world

Why did Honda choose this particular location?

In a highly competitive global economy transnational corporations are looking for new locations for their assembly factories that are near to their markets, where they can sell their goods easily.

• Swindon, provided a good location to export cars to european markets
• TNCs are also attracted to places where wage costs are lower. In the UK at the time, wage costs were lower than those in many other European countries. Therefore they were able to make good profits
• Labour relations were good, with strikes less common in the UK. As a result, less time would be lost due to a cut in production.
• The M4 and M5 motorways are close by. Swindon is located along the M4 corridor so has easy access to London and its airports for visits from headquarters in Japan.
• It has rail links and is close to a busy port making it easy to transport goods.
• An available and well educated labour force was also available in a rapidly growing town which has attracted many similar industries.
• A former airfield site was ideal as it had an edge of town location, was flat, provided the space to build the factory, along with a test track and had space to expand in the future

How do these changes impact on people & the environment?

Impact on people:

• 5000 jobs created for local people directly in the new Honda plant by 2007
• Indirect employment created through links with the Honda plant, in associated industries which supply goods and services to the company
• Area became a more attractive place for people to live. Disposable income for many people increased. As a result, local shops and services benefited from people spending more money
• Increase in traffic on feeder roads, which affected the quality of life of local residents as deliveries occurred 24 hours a day

Impact on the environment

• Increase in noise pollution due to cars and delivery lorries entering the site all day and night.