Britain is just about holding up in tough times, but exporting to Europe is not the answer

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A Honda Civic rolls off the production line at Swindon's plant in 2011.
A Honda Civic rolls off the production line at Swindon's plant in 2011. Photo: Steve Parsons/PA Archive/Press Association Images

Zig-zags and headwinds. The metaphorical warnings that we face a tough year ahead are beginning to sound monotonous but I'm afraid they still hold true.

Today we have learned that Honda is to cut 800 of the 3,500 staff it employs at a factory near Swindon with more at suppliers likely to follow. The redundancies come only months after it announced a quarter of a billion pounds investment and added 500 jobs at the very same plant.

UK sales of the Civic, Jazz and CR-V models produced there are holding up (in fact the motor industry as a whole could boast 2012 sales here up over 5 per cent) but there are problems abroad.

Demand for Honda cars from the crisis countries of the eurozone like Greece, Italy and Spain has dropped like a stone and with the economies of France and Germany expected to suffer this year as well, orders from Europe are likely to remain flat at best.

Prime Minister David Cameron pays a visit to Honda in Swindon in February 2011.
Prime Minister David Cameron pays a visit to Honda in Swindon in February 2011. Credit: Steve Parsons/PA Archive/Press Association Images

That is a growing problem for the industry which has the capacity to make many more cars than are needed. The Swindon plant could turn out 250,000 cars a year but last year was only asked to make 151,000.

It's a similar picture at Ford which is stopping vehicle manufacturing in the UK altogether is hard to find.

Manufacturing takes place at Swindon's factory in 2011.
Manufacturing takes place at Swindon's factory in 2011. Credit: Steve Parsons/PA Archive/Press Association Images

Manufacturing fell in November by a fraction - the fourth month in a row without growth and leaving output from factories pretty much where it was at the beginning of 2010.

Britain is just about holding up for now but exporting into the headwinds of Europe is not the answer.