Companies are increasingly backing the UK as a base for high quality products as the gradual trend towards re-shoring, bringing manufacturing / production in-house and, sourcing UK based suppliers, continues.
The increasing pride in UK capabilities and as a business environment in which to manufacture is shown by the fact that 84% of companies see the UK’s reputation for quality as an advantage to being based here.
According to a new report, ‘Backing Britain – a manufacturing base for the future’, published jointly today by manufacturers’ organisation EEF and global law firm Squire Sanders, 1 in 6 companies re-shored production in-house in last three years and 1 in 6 companies re-shored sourcing to a UK based supplier. The main reasons for re-shoring are improved quality closely followed by issues surrounding delivery and minimised logistics costs, while one of the main benefits is for the companies themselves – 40% of companies see turnover increase and 60% see profit and employment increase.
Stockport is already home to a successful manufacturing sector, accounting for 7.9% or 9,500 of the local workforce; the gradual re-shoring may lead to an increase locally as new developments are Airport city contribute to improved logistics.
The survey of 271 companies carried out in December 2013 also shows this gradual trend is set to continue with 6% of companies saying they are planning to re-shore production in the next three years.
Commenting, EEF Chief Executive, Terry Scuoler, said:
“The trend may be gradual but is highly encouraging to see more re-shoring continuing. While it will always be two-way traffic, the need to be closer to customers, to have ever greater control of quality and, the continued erosion of low labour costs in some competitor countries means that in many cases it makes increasingly sound business sense.”
Cipriano Beredo, partner and global leader of Squire Sanders’ manufacturing industry group, added:
“Companies in both the UK and the US that have previously off-shored low cost production may no longer be reaping the same benefits. While moving any manufacturing across borders is a significant decision for management, the report shows that this is not motivated solely by cost, but often to improve the quality of what is being produced and enhance customer service.”
Smaller companies in particular are more likely to have brought production back from China, whilst larger companies are more likely to have re-shored from Eastern Europe.
Despite the increasingly positive brand reputation of manufacturing in Britain and, the UK as a business environment, the survey also showed that disadvantages still remain. This is especially important given the competition for location of production and internationally mobile investment. The cost of energy and availability of suitable skills were cited by half of companies as the biggest negatives to increasing their manufacturing activity in the UK respectively, whilst 44% of companies cited a lower tax burden as the biggest change in government policy they would like to see.