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UK companies are bringing manufacturing back home

16.04.2014

​A major new report released by the Manufacturers' Association EEF, and based upon research conducted by GfK, has revealed that 1 in 6 UK manufacturing companies has re-shored production in the last three years, compared to a figure of 1 in 7 in 2009.

The survey also shows that this gradual trend is set to continue, with a further 6% of companies planning to re-shore production in the next three years.

Commenting on the survey, EEF Chief Executive Terry Scuoler said "This trend may be gradual, but it is highly encouraging to see re-shoring continuing.  While it will always be a case of two-way traffic, the need to be closer to customers, to have greater control of quality, and the continued erosion of low labour costs in some competitor countries mean that in many cases it makes increasingly sound business sense."

And speaking at the EEF's National Manufacturing Conference, Business Secretary Vince Cable declared that "Britain is starting to win back business on the basis of hard-headed business decisions, quality, and good performance."

GfK's research was based on interviews with 275 strategic decision-makers in UK manufacturing companies, conducted in December 2013.

Key findings from the study include:

     

    • 1 in 6 companies have re-shored production in-house in the last three years; similarly, 1 in 6 have re-shored sourcing to a UK-based supplier over the same period

    • Three quarters of those re-shoring say the benefits have either met or exceeded their expectations

    • China is the region most commonly re-shored from, followed by Eastern Europe

    • The extent to which UK manufacturers are increasingly innovative and focused on quality and brand reputation is highlighted by the fact that half of companies see quality as their main source of competitive advantage, followed by customer service and on-time delivery - in contrast, only 17% are seeking to compete on cost

    • 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

    • The main drivers of re-shoring are improved quality, delivery-associated issues, and minimalisation of logistics costs

    • The importance of delivery issues is also reflected in the changing nature of production, with 56% saying that their delivery schedules from overseas suppliers did not fit with their shorter order books

    • 4 in 10 of companies re-shoring have seen their turnover increase, whilst 6 in 10 have seen an increase in profits and workforce size

    • But obstacles remain - the cost of energy and availability of suitable skills were cited by half of companies as the biggest negatives associated with increasing their manufacturing activity in the UK, whilst 44% mentioned a lower tax burden as the change in government policy that they would most like to see

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