For many years the low costs associated with manufacturing in the Far East and Eastern Europe have tempted many British manufacturers to move their processes abroad, something that is known as ‘offshoring’. However we are now seeing a trend known as ‘reshoring’ develop, whereby manufacturers are bringing their production back to the UK. Latest statistics from the Manufacturing Advisory Service (MAS) Barometer show that last year 11 per cent of England’s manufacturing SMEs brought production back to the UK, compared to just 4 per cent that offshored.
Many businesses are now realising that whilst the ‘landing’ price of offshoring may appear attractive initially, once factors such as delays in logistics and issues around quality are taken into consideration, an entire layer of hidden costs may become visible. The MAS Barometer revealed that these areas are the main focus for those firms looking to move production, with 26 per cent citing a reduction in cost as their main driver, whilst 20 per cent cited improved quality and 18 per cent shorter lead times. These factors, combined with the increasing labour and shipping costs in developing economies, are leading firms to realise the growing benefits of manufacturing in the UK.
The benefits can also be seen in the UK’s wider economy, with the possibility of reshoring leading to the creation of more jobs and driving economic growth. For those firms who have brought their manufacturing process back to the UK in the past twelve months, 68 per cent have reported an increase in sales.
Speaking at the World Economic Forum in Davos last week, Prime Minister David Cameron shared his ambition for the UK to become a ‘re-shore’ nation, and announced that the expertise of UK Trade and Investment and MAS would be brought together to create ‘Reshore UK’. The purpose of this new service will be to provide tailored support for businesses that want to capitalise on the opportunities of reshoring, with each company having a dedicated individual to help them.
For more information on how Reshore UK could help your business, contact the Manufacturing Advisory Service on 0845 658 9600