Some time ago I came across a report about the British motorcycle industry (HERE) from 1975 which I think has some lessons for us today. Until the 1960s we had what we thought was a thriving industry with dozens of manufacturers all producing bikes for the UK market and for export all over the world. But this all came to an abrupt end when Honda began making bikes after the war. Single handedly, Honda destroyed an entire British industry leaving just a couple of niche manufacturers.
The report was commissioned by the government after they had put in £24 million to help the industry with apparently little or no effect. The report was an indictment of British manufacturers but it could still apply today. When Honda entered the UK market they did so with small 125cc bikes that were better, more reliable and cheaper than ours. Instead of competing, British makers relinquished that part of the market and made bigger bikes. But Honda started offering larger machines, leaving domestic manufacturers a smaller and smaller part of their own and overseas markets. Sales and profitability fell and the industry rapidly declined.
In 1974-75 the entire British industry produced 20,000 machines while Honda alone managed two million! They were making 300 bikes per man at their Suzuka factory compared to our 10-18 bikes per man.
The point of bringing this up is that when discussing strategy the authors suggested the only possible one was effectively to make distinctive bikes at low volumes and priced at premium levels. They said: "To hope to find a product or market of any significant size which the Japanese would not enter would be an unrealistic foundation for strategy".
This is exactly what the Brexiteers are proposing. They say our exports to the EU are falling while exports to the rest of the world are increasing. Therefore we must leave the EU and exploit new opportunities elsewhere. This is a direct parallel to the 1970s motorbike industry - stop competing and retreat to markets that want our products. They are trying to find markets that European companies will not eventually enter. This is impossible. If we cannot compete in Europe we will not compete anywhere.
