Worries for the UK car industry after Honda’s job cuts

 

The fears are running high in the UK car industry, especially after the announcement of 800 job cuts by Honda at its Swindon plant. This is the first time that the company has announced a cut back on its work source and puts the blame on the slow demand across Europe. Rolls-Royce too has shown a decline in its growth by 1% as compared to last year.  It seems the slump in European sale had made it compulsory for Honda to do the needful and cut jobs. This means that the employee numbers will go down from 3,500 to 2,700 at Swindon.

 

The Swindon plant produces the Civic, Jazz, CR-V models. 150,000 cars were made in 2012 and the number is well below the capacity of the plant at 250,000. The cut down on work force has sparked many fears as to more redundancies will follow in. The markets in Europe are showing little sign of recovery and the impacts can be seen in the UK auto industry. This is not good news for the UK manufacturing and the al economy.  However, chief executive of the SMMT , Society of Motor Manufacturers and Traders thinks otherwise. According to him Europe is facing some difficulties but this UK markets are still holding up reasonably well.

 

Ford had already announced plans to cut down about 1,500 jobs at plants in southern England in October last year. The same week, more than 2,000 workers were moved by Vauxhall’s Ellesmere Port Factory to help General Motors and look for more savings. GM, however, visualizes further slowdown in European car sales in the coming months. Cost-cutting programs announced by GM year may not be enough. These auto giants will have manage their cost structure, reducing losses and meet the expected demand.
SMMT has forecasted the business to remain more or less flat in 2013. UK, sales had done well last year and were up by about 5%. However, as UK exports make for more than 80% of its cars, the domestic market has little impact on the auto manufacturers. Europe makes for the major market for Britain’s exports. But as sales fell across Europe in the first months of 2012 because of the eurozone crisis,, this posed for a bleak outlook for the UK car industry. UK sales have seen a boost, primarily because of the Britons holding on to their motors. But according to analysts, there are no such pent-up demands in Europe.