As far back as 2014 an increasing number of UK manufacturers were bringing work back to the UK. Reshoring is now gaining further momentum as comparative production costs in the UK become more favourable to manufacturers.
“There has been significant wage inflation in China, which is contributing to making the idea of bringing manufacturing back here more attractive,” explains David Atkinson, UK Head of Manufacturing at Lloyds Bank Commercial Banking.
However, the benefits of reshoring, where a business transfers its operations back to its country of origin, need not be simply reactive. The Made in Britain approach has several potential long-term advantages for manufacturers.
Shortened Supply Chains
“Reshoring means you can shorten your supply chains, which makes you more attractive to customers,” explains David. “This is especially important in an era where customer expectations are all about faster delivery times.”
With the potential for tariff complications following Brexit, shortening supply chains may also be a necessity for many manufacturers.
“In many ways, it is a question of perspective,” suggests David. “While there is an understandable focus on the risks to current supply chains of disruption, might there not equally be new opportunities?”
“Manufacturers must work strategically with tariff changes rather than against them. If we lose some manufacturing to European reshoring, can that not free up capacity for production aimed at local markets here, to significantly shorten these supply chains?”
Working with a Weaker Pound
For those companies who can localise their production and export abroad, the weaker pound offers opportunities to increase volumes and margins.
“The weaker pound has both advantages and disadvantages for the manufacturing sector. Export orders might rise on the back of it, but it can also mean the cost of imported raw materials will rise.”
“Manufacturing is benefitting from a weak but stable exchange rate, but in the longer term, volatility may prevent it from taking greater advantages of a weaker pound”
There is still the question of what kind of manufacturing will thrive in the UK in the future.
The Focus on Excellence
“The UK is never going to become a competitive mass manufacturer again, but it is becoming a valued, specialist centre for excellence,” says David. “The new industrial revolution is all about harnessing technology for innovation, and adding service value to what you produce.”
This manufacturing agility fits in well with the idea of shorter delivery times and increased responsiveness to customer demand.
“For many companies, the original impetus for reshoring has come from needing to meet standards for higher quality products. For SMEs especially, having consistent standards of excellence and good customer service are helping them establish themselves.”
“Ultimately, reshoring is a positive development for UK manufacturing, but it is also about how manufacturing has changed and is continuing to evolve into something far removed from its 20th century industrial heyday”
David concludes, “Reshoring is a signifier that the future of manufacturing lies in fresh developments and bold approaches.”
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