One in six UK manufacturers reverse offshoring in growing trend By Brian Groom, Business and Employment Editor Raspberry Pi computer part Made in Wales: Most Raspberry Pi computers are now made in the UK One in six UK manufacturers has brought production back from overseas during the past year or is in the process of doing so, suggesting that “reshoring” is starting to gain traction. The number of companies returning production from countries such as China is outstripping those moving output overseas, according to a survey of more than 500 small and medium-sized manufacturers. UK manufacturing optimism grows IN UK BUSINESS Tax avoidance schemes fall to all-time low ‘Climate of fear’ for small business borrowers Business chiefs push for Stansted upgrade Croydon residents want to shake off image The study, by the government’s Manufacturing Advisory Service, found 15 per cent of companies were returning production, compared with only 4 per cent that offshored in the past year. Its findings suggest that reshoring, also known as “onshoring”, has been modest in scale so far but may be gaining momentum. More than a quarter of respondents (26 per cent) said concern over the cost of offshore production was the principal reason for reshoring, followed by improving quality (20 per cent) and reducing lead times (18 per cent). Steven Barr, head of the MAS, said: “There is a growing desire from companies to take production home. This marks a major change in approach from five years ago when the Far East and eastern Europe seemed to be the destinations of choice.” Rotigrill, a supplier of rotisserie barbecues based in High Wycombe, Buckinghamshire, is to make the bulk of a new product for pubs and restaurants in the UK rather than China, using a local engineering company. “When I looked at the cost and time involved in getting what is probably a low-volume product for China up and running through to the prototype stage, it was just ridiculous,” said Colin George, the company’s co-founder. “Shipping costs have more or less doubled in 18 months – that is frightening. Wages in China are going up. We know that our cost is going to increase.” The company will continue to make its main product in China, having invested in tooling, but, said Mr George: “Watch this space: who knows what is going to happen in the long term?” John Lewis, the retailer, aims to increase sales of UK-made goods in its shops by 15 per cent in the next two years. Bathrooms, the online retailer, is handing half the contracts currently held by Chinese manufacturers to businesses in the Midlands, reducing the time from design to production from six months to six weeks. The main distributor of the £24 Raspberry Pi computer recently shifted its production from China to Wales. Hornby, the model maker, has returned production of 60 per cent of its paint brand Humbrol from China to the UK. However, some companies are still offshoring. Caterpillar of the US is shifting 70 per cent of its small diesel generator production to China, with the loss of 760 jobs in Northern Ireland. The MAS survey confirmed an improvement in manufacturers’ business confidence: 56 per cent increased sales in the past six months, up three percentage points on the previous quarterly survey; 51 per cent plan to invest in machinery and premises, up 10 per cent on a year ago. A separate survey by EEF, the manufacturers’ association, found that more companies are seeking finance to invest, but it is coming at a price. Businesses, especially smaller ones, reported that the cost of finance was going up. The overall cost of credit increased for 11 per cent of companies in the past two months, the highest level since the end of 2012. But Lee Hopley, EEF’s chief economist, said this should not be seen as a failure for the Bank of England’s Funding for Lending Scheme. “In the coming quarters we hope to see the scheme deliver greater availability, as well as a lower cost of borrowing for SMEs,” Ms Hopley said. Bringing it all back home RDM Group, a Coventry-based automotive component supplier, will this week start manufacturing at a new £400,000 factory in the city, allowing it to repatriate subcontracted production from China. It will make aluminium rechargeable torches for Jaguar Land Rover at the plant and plans to bring the rest of its China-based work, mostly of moulded products, back by the middle of next year. RDM has made some components in China for the past eight years. “We went there because it was going to be cheap, but cheap has turned into ever-increasing prices because wages and other costs are rising rapidly,” said David Keene, chairman. Another factor was the need to respond rapidly to customers’ needs. “The automotive companies are getting faster and faster in their cycle of delivering products. There is also a lot of personalisation going on,” said Mr Keene. “If you have got a supply chain that takes months to bring stuff in, you can’t be flexible.”
Posted on: Mon, 25 Nov 2013 07:59:31 +0000
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