British manufacturing in “reshoring” job boost

Posted on 2 Jul 2013 by The Manufacturer

British manufacturers are to hire more staff to cope with an expected surge in demand caused by a “reshoring” of production to the UK, according to a new report.

The survey, published jointly by Business Birmingham and YouGov, has revealed almost a third (32%) of senior decision makers from the British manufacturing industry plan to source more components from UK companies over the next five years.

This means that more than half (51%) plan to boost production capacity in the UK in the next five years, with nearly two-thirds of these (56%) say they are likely to hire more staff.

Reasons cited included rising overseas costs (59 per cent), and simpler transport and logistics (51 per cent), were amongst the most widely cited factors by the 41 per cent of respondents who reported that the UK is becoming more attractive as a manufacturing destination compared with locations abroad.

Lorraine Holmes, area director for the Manufacturing Advisory Service (MAS), welcomed the findings.

“We’ve got countless examples of local firms coming to the rescue of UK businesses that have been hit by quality issues, lead times on delivery and poor communication from foreign suppliers,” she said.

“MAS’ role is to help support SMEs to be globally competitive and to ensure there is capacity in our supply chains to take advantage of the re-shoring opportunity.”

Commenting on the findings, Wouter Schuitemaker, Investment Director at Business Birmingham, said: “Re-shoring can help us rebalance our economy, create new jobs and cut our trade deficit. It’s vital that we back our manufacturers and pull out all the stops to support those who are bringing manufacturing home.

“We need to make sure that businesses along the supply chain are not burdened by regulations such as those around visas, and are not disadvantaged by high energy costs.”

The research supports evidence of the re-shoring trend, which is seeing manufacturers respond to rising costs in countries like China by bringing production back to the UK.

The UK stands to boost its international trade balance by £20 billion and an estimated 200,000 jobs could be created over the next 10 years, in findings recently published by the RSA and Lloyds Banking Group.

Ms Lee Hopley, chief economist at EEF, warned that policy-makers must continue to make sure the UK is a competitive place to invest in if it is to capitalise on the latest positive indicators.

“We are hearing more reports of companies looking to source materials and other services in the UK. This is another sign of industry’s growth potential and builds on the latest positive indicators from Monday’s PMI.

“But whatever the reason, policy-makers need to make sure the UK is a competitive location for investing in modern machinery and innovation, if we are to capitalise on this trend.”