Workers at the firm’s factory in Swindon, which is not producing any cars at the moment, are set to receive a letter from the company stressing how “dire” the situation was for car manufacturing.
An official at the Unite union said negotiations were yet to be held on the company’s proposals.
An increasing number of companies are asking staff to agree to a pay freeze or even cuts in return for guarantees of no compulsory redundancies.
Unite’s regional officer Jim D’Avila said: “Honda is following Toyota’s lead. In return for no compulsory redundancies, the company is asking the staff to accept cuts in pay. No decision has been made.
“Unite’s priority is to secure jobs and give our members a fighting chance of coming through this economic turmoil with their jobs and livelihoods intact.
“Therefore the union will be entering into negotiations with management. We intend to ensure that these discussions are genuine negotiations which seek to produce a realistic outcome.
“Any decision will not be taken lightly. We expect Honda to ensure none of our members’ benefits are eroded in the long term and that these skilled workers will remain in place and at work ready for when the upturn comes.”
The letter, from Dave Hodgetts, director of planning and business, said: “From an economic viewpoint, we cannot find much encouragement for the next 12 months, as the downturn continues to affect car sales throughout Europe.
“The seriousness for the global car industry and the unpredictability of what will happen in the future cannot be underestimated, and make it extremely difficult to confirm a longer term plan. While we are not able to predict when the economic situation may improve we must continue to remain flexible to the ever-changing circumstances and be prepared to implement appropriate countermeasures in response.
“Honda Motor’s (HUM) financial situation has been dramatically affected by this economic downturn. The European and Japanese operations are most severely impacted with Honda Motor, Japan, forecasting an unconsolidated £321 million loss for the first time in its history.”
Honda said it had made “enormous efforts” to restrict and cut costs while protecting jobs, adding that a “small number” of workers had applied for voluntary redundancy.
The letter continued: “It seems unlikely at this stage that this final phase of the programme will be able to make a reasonable match between our planned and actual manpower for this next financial year.
“Our intention is to provide job security for those of you who remain committed to HUM and it remains our aim to maintain an objective of no redundancies. We believe the mutual trust between associates and HUM is always the key to our success. Therefore, we will manage to survive this severe situation by using a totally different approach than any other competitor.
“Looking at our conditions, overall Honda profitability, the European financial situation and the fact that we will have a significant level of surplus manpower, we will now need to take the action mentioned in the previous letter. In outline, this is likely to be a one year pay cut for all associates.
“We are fully aware that a one year pay cut could adversely affect your motivation and lifestyle, but we hope that if you are committed to HUM’s future, you will understand the necessity for this action and find ways to manage the situation.”
By Alan Jones, Press Association
Independent on Sunday, Business