US industrial companies are predicting strong growth in North America, saying that in 2012 for the first time since the start of the financial crisis, the region will be one of their big growth markets. Robin Johnson, partner and chair of industrial engineering at international law firm Eversheds, comments on the trend for local market based manufacturing.
For the last two quarters there have been repeated mutterings within the manufacturing industry that things aren’t as bad as they are being made out to be. US diversified earnings announcements are bearing this out and showing a continuing upturn although they are being countered by slower growth in European earnings figures.
Caterpillar announced the opening of nine new plants in 2013, though admittedly none in Europe, and when asked whether they were worried about supply chain shortages they simply said their suppliers must move with them. What we are seeing is an increasing trend for supply chains being closer to customers. In the last decade we saw this happening across Eastern Europe as car plants opened in Slovakia and Poland. We then saw a movement to Asia prompted by its reputation as a low cost option. This is now reversing with US companies seeing an increase in the cost of manufacturing in Asia as well as quality control issues and logistics cost increases.
The move to service local markets locally will only increase. We are likely to see manufacturing in Asia for Asian markets, US manufacturing for North American markets and European manufacturing for European markets. This creates significant opportunities for UK business, particularly in high specification engineering, as the UK’s innovative approach to maintaining manufacturing excellence is recognised throughout the world.
