Made in Britain – so what?

UK manufacturers talk about the value of their Made in Britain credentials and whether they apply the same purchasing principles they aim to induce in customers to their supply chain decisions.

With the Diamond Jubilee and London Olympics to celebrate, 2012 saw the union jack become a popular fashion statement –  not just for flag waving patriots, but for business too.

An array of Made in and by Britain campaigns sprang into being or were rejuvenated. The logic was obvious from a marketing perspective – seize the UK’s moment in the spotlight to market its goods and services. But how valuable is this in reality – and do OEMs or end product manufacturers do as they would be done by when it comes to buying British?

Brand Britain – for the discerning consumer

Stoves, a manufacturer of kitchen cookers – most well known for its Rayburn ranges – has been trying to communicate and promote the value it puts on UK manufacturing for years.

In 2011 Stoves launched a ‘Made in Britain’ marque. A logo for British manufacturers to proudly display on their products in order to put customers beyond doubt about the provenance of the item they were buying.

Stoves took the initiative in launching this marque on the back of market research which showed the British public to be confused about the origin of many of the brands they thought were produced in the UK but keen to change their buying habits if they were given clearer information on this score.

Indeed the Stoves survey of 1000 members of the public revealed that 36% consciously buy British when they are supported in doing so and a third would do so more often if they could clearly differentiate between UK-made and imported products.

Since the launch of the Made in Britain marque over 700 companies have signed up to use it on their products which range through motorbike clothing and accessories, paints and coatings, catering equipment, surgical instruments, dehumidifiers, showers, children’s toys and much more. Criteria for use of the marquee adheres with country of origin guidelines in the 1968 Trade Descriptions Act.

And its not only users of this specially designed logo that have found sought to leverage ‘Britishness’ to influence consumer buying habits.

Wet-wipes manufacturer, Ian Anderson, marketing director at  Nice-Pak International, says that it had particular success in improving the sales of the facial wipes it makes for a major UK supermarket’s own-brand range following the addition of a UK stamp on the packaging. Furthermore, research undertaken in advance of the launch of its new Grime Boss product fed back that overt UK branding would be a plus for British buyers.

According to Stoves survey, 55% of respondents said their motivating factor in a ‘buy British’ purchasing decision is a desire to support UK jobs but Nice-Pak has also found that consumers can be actively averse to buying imported products for ethical, health and quality reasons.

“We had feedback from consumers that if they knew a product was made in China they would be concerned about buying it due to associated human rights concerns and even concerns over the types of chemicals used in the manufacturing process,” says Anderson.

“Our market research showed that forty one per cent of people would be less likely to buy Chinese manufactured products if they knew where they were from. The trouble is that many importers are subtle their labelling choices. Rather than putting ‘Made in China’ on products there is a tendency to reference ‘PRC’ [Peoples Republic of China] which many consumers do not understand.

“I am not suggesting that consumer concerns about Chinese manufacturing are necessarily justified,” qualifies Mr Anderson, “but if we can offer them a choice which they feel more confident in then it gives us an immediate advantage and it would be foolish not to take that.”

More than  patriotism

But while this show of patriotic confidence in the quality of UK manufactured products is edifying, with high expectations for an export led recovery it is surely more important to ask whether international customers too, find the assurance of Made in Britain a positive influence on their purchasing decisions

Jonathan Casley, sales and marketing director at Stoves is confident that it does. “Our experience shows that customer value of Made in Britain is not restricted to a patriotic ‘buy British’ campaign. Stoves has a rapidly expanding export market and we know that our international customers are strongly influenced by our British manufacturing location.”

“We exhibited for the first time in 2011 at IFA in Berlin,” continues Mr Casley. “This is the biggest trade exhibition for manufacturers of domestic appliances and associated component in the world and it attracts manufacturers from China, Japan, France, Germany – all over. They all voiced huge respect for UK manufacturing and the fact that our revenues from exports have gone from 1% four years ago to 7% today proves that this is more than just words.”

Summing up Casley states, “Our market is extremely competitive – there are over one hundred rival brands. While we must remain focussed on being competitive and cannot expect to charge customers a premium for it, being UK-manufactured is our key  differentiator.”                                                                                                                                  

Supply chain choices

The above is great news for end product, consumer-facing manufacturers in the UK. But do those companies who benefit from Made in Britain credentials back up their status with supply chain strategies which give integrity to the claim? Can bearing a stamp for British manufacture bring sales uplifts to industrial products and components in the same way as it does to consumer products?

Ever the champion of UK manufacture, Casley again says that its own supply chain selections are positively influenced if the potential supplier is UK-based. But, in reality, he admits that there is a point for certain components at which the cost:value ratio does tip – for instance Stoves sources its gas burners from mainland Europe.

“We always look at the total cost,” he assures. “You have to take into account more than simply the piece cost but a whole gamut of other costs and risks associated with buying from abroad, including failure rates, quality checking procedures and later service costs.”

Mounting costs throughout the supply chain will determine whether any product, consumer-facing or not, can be sold competitively. But as servitisation escalates in manufacturing some companies are finding that a wealth of ‘soft’ issues around the delivery of value-add solutions can be leveraged extremely effectively from the UK, gaining advantage over foreign competition.

Graham MacGregor, MD of MacGregor Welding Systems has certainly found this to be the case. The company is a micro joining specialist supplying an international market. Its key competitor is a US/Japanese company which outstrips MacGregor many times in terms of size but which focuses on  providing point product applications.

“We benefit from being a solutions provider rather than a box shifter,” comments Mr MacGregor. “This approach is noticeably absent from companies based in Asia – a big market for us.” MacGregor also says that being a UK company come with a trust tag in the US where homegrown manufacturers have been prone to placing difficult to achieve ratings on product performance. “British manufacturers tend to be more conservative,” he says.

Cutting short any formation of a complacency breeding superiority complex however, MacGregor cautions, “Our international customers, particularly those in China, hold European engineering in very high esteem – but I don’t think they differentiate greatly between UK engineering and European engineering. Where there is a differentiation you tend to see the UK one step behind Germany in having won their respect.”

Government and big business

Comparisons between the UK and Germany in terms of engineering and manufacturing prowess or culture are commonplace – and the UK rarely comes off well in such encounters. German approaches to purchasing and supply chain strategy are no exception.

In the last couple of years there have been high profile faux pas made by British government in its choice of suppliers for key national contracts. Commentators have observed that similar choices would not be made by other EU administrations, including Germany and France, which are more ready to bend EU procurement rules for national benefit. In the September 2012 industrial strategy announced by Business Secretary Vince Cable there was recognition from the coalition that this needs to change and a commitment to challenge EU rules was made.

But according to Nice-Pak’s Anderson, it will take more than change in government procurement rules to make a real impact on supply chain purchasing decisions. Companies need to move towards a deeper set culture of local sourcing – not just for the components in their products, but for the minutiae of items which make their business tick – hand wipes, catering equipment, lighting.

“In the UK, while we see significant engagement at a consumer level in the idea of buying British made products, I can’t say I see the same in our trade customers,” observes Anderson. “In Germany, where we also have a factory, our conversations with trade customers are far more likely to involve discussion of German sourcing. They are more motivated by the idea of local sourcing.”

Certain sectors its seems – notably retail – are ready to support British sourcing where it can be seen, but less so in behind the scenes operations an B2B transactions.

Not so at GE Aviation asserts Jeff Kennelly, operations leader at the organisation’s 1.2 million square foot facility for engine servicing and overhaul. “We rely heavily on our UK location,” says Kennelly. “We’ve had a base in Wales since 1940 and we actively market this to our customers who appreciate the pedigree of service we supply.”

“But that pedigree is not just down to GE. We seek to build long term relationship with companies that supply us and look to build a dynamic which can give us what we need quickly, and with understanding,” he continues. “What that means in practice is that we now spend around £20 million with our local supply chain and have 147 suppliers throughout Wales. They provide us with everything from tooling to canteen equipment and many of them have achieved significant growth as a consequence of joining our supply chain.”

The supply chain selections of large companies like GE are critical if the UK is to build a robust industrial economy. In addition to bringing flexibility, reducing susceptibility to supply chain disruption and shortening lead times, local sourcing can provide a natural hedge against global currency fluctuations, as Toyota Europe’s vice president of purchasing, Mark Adams, explained to Lean Management Journal in a 2012 interview.

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