After you reshore, refocus on exports

Posted on 14 Sep 2017 by The Manufacturer

It might not yet be a ‘movement’ exactly, but interest in the concept of reshoring from UK manufacturers is certainly building momentum.

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The UK already has the infrastructure to drive a powerful export market – stock image.

After years of outsourcing production abroad at the expense of domestic industry, bringing it back home now makes sense for all sorts of reasons.

First of all, the UK continues to carry a significant trade deficit between imports and exports. When times were good, being a significant net importer didn’t seem to pose any problems, and was seen as a sign of our economy aligning around consumption and service in a globalised market.

But the economy has struggled for the best part of a decade now, and the balance of payments has only increased. Last year, the deficit was £156.2bn. That is a big discrepancy between outgoings and incomings for an economy struggling to grow.

Secondly, there is Brexit. The EU remains by far and away the UK’s biggest trading partner, and with so much uncertainty surrounding how that relationship will pan out, looking to bolster the domestic economy with a renewed focus on manufacturing is a sensible step.

Keeping sights on far shores

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The recent drop in the value of the pound should help increase exports from the UK – image courtesy of APS.

Reshoring makes sense for all of these reasons. But a renewed focus on domestic manufacturing tends to get lumped in with calls for increased domestic consumption, i.e. if everyone started to ‘buy British’, home output would boom again.

Becoming too insular in our outlook in the wake of Brexit would be a missed opportunity. Yes, being able to capitalise on increased demand for domestically-produced goods at home would be great. But also capitalising on demand for British goods abroad would be even better.

The UK export market is looking strong. Boosted by the drop in value of the pound after the EU referendum, exports were up nearly a quarter year-on-year in Q1 this year. But we shouldn’t do ourselves a disservice by saying it’s all to do with weak Sterling. Rising exports shows demand for British goods is out there, especially beyond Europe.

Our trading relationship with the EU has a lot to do with why we are tied into a trade deficit. While imports from the EU have grown at an average of 4.9 per cent a year since 2009, and the deficit in EU trade has grown by almost £60 billion in that time, beyond the EU we have seen the opposite trend. Exports have grown by an average of 5.8 per cent, adding £60 billion to the economy.

Trade opportunities for manufacturers who choose to reshore to the UK are ready and waiting. This magazine has highlighted the example of Trunki, which brought production of its child’s suitcase range back from China. Now Trunki is exporting its British-made cases back to China with great success, as demand for Western-produced goods among China’s massive urban middle classes soars.

Post-Brexit, the UK will be free to capitalise on these opportunities with new trade deals. Commonwealth countries like Australia and New Zealand have been quick to show their eagerness to trade with the UK. Incidentally a market that the EU has failed to strike a trade deal with amid disagreements over agriculture, generic drugs and the movement of workers.

Freight infrastructure

We already have the infrastructure to drive a powerful export market – the air and sea freight industry has been pivotal in the import and offshoring economy, and can now be turned to moving British goods back out throughout the world. There could be improvements, we need to resolve the Heathrow third runway issue and expand our airport capacity, and major investment in our ports is needed to catch up with the likes of Rotterdam and Hamburg on the continent.

But critically, the expertise is there. For British companies exporting for the first time who need help with freight forwarding, logistics, outsourcing, documentation and staff training, the UK freight industry has all the resources ready and waiting. Together, we can capitalise on a reinvigorated UK manufacturing sector and transport brand Britain to the top of the world again.

Alliance Shipping Group is a leading provider of blue chip sea and air freight services worldwide. For more information, please visit