Industry watchers have been talking about the trend towards reshoring UK manufacturing for a number of years now.
The term describes moves by British companies to bring home parts of their operation that they had previously moved offshore. During the 1990s and early 2000s, the trend was towards firms relocating production and assembly to destinations where labour was cheaper, such as China and Eastern Europe. However, recent figures show that this tendency is being reversed to an extent.
Earlier this year, manufacturing lobby group EEF published details of a survey which revealed one in six of UK manufacturers had “re-shored” elements of their activity back to the UK in the past three years. Key reasons for doing so was the ability to keep closer control over quality and improved delivery times.
According to professional services consultants PWC, other factors driving this trend include the lessening wage gap between the UK and emerging economies, and the rising price of international transport. While low wages have seen living standards stagnate in the UK in recent times, it would seem a more fortuitous by-product is they are helping to bring jobs back to these shores.
UK Trade & Investment (UKTI) says it has identified around 1,500 manufacturing jobs that have been brought back due to reshoring but PWC estimates the trend could eventually create hundreds of thousands of new UK jobs over the next decade, and lift annual national output by around £6-12 billion. It says sectors such as textiles and electrical equipment manufacturing could benefit while extra jobs in research and development, back-office services and telecommunications could be generated.
The firm has called on policymakers to support firms bringing business back to the UK by making the tax regime more competitive, improving transport infrastructure and helping businesses working in the same fields to come together. The Government says part of its Industrial Strategy is to develop a long-term partnership between government and business to provide confidence for investment and growth, particularly in manufacturing.
In addition, the Manufacturing Advisory Service (MAS) has partnered with UK Trade & Investment (UKTI) to launch Reshore UK, hailed as a “one-stop-shop service to help companies bring production back to the UK”. It is intended that the new service will provide advice as well as a matching and location service for company’s returning activities here. It says it wants to support small and medium sized businesses “to be globally competitive and to ensure there is capacity in the UK supply chain to take advantage of the reshoring opportunities”.
While it isn’t time to get the bunting out just yet – there are still a small proportion of UK firms moving work away from the UK – this is a hugely encouraging trend for UK manufacturing and the economy as a whole, and one we as a country must do all we can to encourage.