In 2019, one of the UK’s largest manufacturers, Albert Jagger Engineering, received approval to reshore up to a million overseas products per year to the UK. Since then, they’ve reported great success – reclaiming ownership of their supply chain caused their sales to skyrocket.
With labour costs in China ever increasing, and UK manufacturers taking steps to match their overseas competitors on price and turnaround, as well as the impact of Covid-19 on supply chains, reshoring manufacturing to the UK is becoming an increasingly viable – and attractive – option. Here’s 6 reasons why you should reshore your manufacturing to the UK.
Gone are the days when procuring from China was substantially cheaper. With shipping, taxes, insurance and labour costs all steadily climbing, the influence of cheap overseas prices on procurement is shrinking. Albert Jagger’s company director Andrew Cooper commented ‘…when you add in all the things such as currency, it’s probably more expensive [to procure overseas].’ The UK manufacturing base has become more competitive with investment in modern technology and production methods, closing the price gap on imported goods. Albert Jagger reported that, so far, their production is 20-50% cheaper, and they have reduced their stock-holding costs by 50%.
There are also other costs to overseas procurement that can be reduced with reshoring. The need to have a representative attend the supplier’s site during manufacture is essential, ensuring that all parts of your specification are strictly adhered to. Keeping your manufacturing within the UK drastically reduces this expense.
Delivery TimesExtended supply chains can be subject to unreliable shipping and transport timescales, and buyers are fast losing confidence that overseas suppliers will deliver on time, every time. Investment from UK companies in modern manufacturing methods have seen delivery times in the UK fall to a level comparable with overseas suppliers. Reducing the supply chain distance has several additional benefits, including certainty about delivery dates, reduced or no shipping/administration costs, and a smaller carbon footprint, which brings us to our next benefit of reshoring...
EthicsNot only is reshoring to the UK more environmentally sound because it drastically reduces the carbon footprint of a project, but it can be more ethical, too. When a manufacturer is based in the UK, the process is much more transparent, accessible, and traceable. It’s a no-brainer for businesses concerned with ethics.
CEO of British barbed wire manufacturer Betafence, Kevin Steers, reshored his manufacturing to the UK after a stint in Tianjin, China. He stated: “the quality was poor and the service was terrible.”
Knowing that your suppliers are ISO accredited is the least that is expected to ensure the supply of quality components. Buying from the UK gives you peace of mind that you’ll receive inspected goods to a required standard, and not have to factor in additional scrap rates or rework.
The impact of Covid and Brexit on overseas suppliers has been profound. In the first two months of 2020, China’s industrial output dropped by 13.5% — the biggest drop on record. In their 2017 report ‘Impact of Brexit on the Manufacturing Industry’, Deloitte found:
UK companies will see a change in access rights to the EU market. Supply chains could become more complex as the introduction of customs inspections and regulatory requirements increases the time it takes to get goods from one country to another. The cost of moving goods to or from the UK for manufacture or distribution will almost certainly increase, as a result of tariff or non-tariff barriers.
With multiple moving parts to be factored in – such as Covid and Brexit – and their ubiquitous uncertainty, the risks involved in manufacturing overseas cannot be understated. Dr Sam Roscoe, Senior Lecturer in Operations Management, Convenor of the University of Sussex Business School MBA and a Fellow of the UK Trade Policy Observatory, gave evidence at the House of Commons International Trade Committee inquiry on the COVID-19 pandemic and international trade in April of 2020. He stated:
What the pandemic has made very clear is we have these hugely complex, globally dispersed supply chains that have a number of points of failure within. A supply chain is only as strong as its weakest link. When one area or one geographical location stops manufacturing, such as when China shut down its manufacturing, the rest of the global supply chain suffers.
With the effects of both Brexit and Covid-19 sure to be felt for many years to come, reshoring your manufacturing to the UK can be a safeguarding measure for your business.
Aftersales support is particularly crucial when it comes to bespoke high-tech components or tooling. The support of a UK supplier should any problems occur initially, or in the future, is critical. It’s far less likely that a UK supplier will leave you to work through problems on your own, you won’t have to jump through hoops to communicate with them, and they will be much better placed to assist you in a timely manner. Saving that time means saving money that can be better invested in the quality of your product.
Many businesses are benefitting from reshoring some, if not all, of their manufacturing to the UK. Reshoring isn’t for every business, but if you’re struggling with the increasing delivery times of the overseas market, if you’re dissatisfied with the quality you’re getting, or if you’re looking to ensure a robust supply chain, you may find that reshoring is the change you need to re-invigorate your business.
You won’t be alone – one report found that, in November of 2020, 32% of manufacturers were looking to reshore, and another 32% of respondents said that they intended to invest in the UK over the next 12 months. In the words of Baddiel, Skinner and the Lightning Seeds: it’s coming home!
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