Quality, cost and delivery driving SME production back home

Posted on 25 Nov 2013 by Callum Bentley

UK small and medium sized enterprises have highlighted their push to bring manufacturing back to British shores due to high costs associated with offshore production.

More than a quarter of respondents (26%) to the Manufacturing Advisory Service’s latest Barometer stated that concerns over the cost of offshore production was the principal reason for reshoring, followed by improving quality (20%) and reducing lead times (18%).

However, the cost of domestic labour continues to remain the biggest barrier for producing within the UK according to manufacturing SMEs, with nearly one in 10 also concerned about the availability of the right skills.

MAS National Director, Steven Barr
Steven Barr, MAS National Director

Steven Barr, Head of the Manufacturing Advisory Service, said; “There is certainly a growing desire from our companies to take production home, with 15% of firms reporting that they have or are in the process of bringing production back. This is compared to just four per cent that have offshored in the last year.

“This marks a major change in approach from five years ago when the Far East and Eastern Europe seemed to be the destinations of choice.”

He continued: “Buyers have realised that there is more to the ‘landing’ price than meets the eye, with delays in logistics and issues around quality adding a whole layer of hidden costs.

“It appears that bringing production back is having a really positive impact on the bottom line, with 68% of firms that have reshored in the past twelve months reporting an increase in sales.

Business Minister Michael Fallon said: “These findings are another sign that the economy is heading in the right direction and confidence is returning as we move from rescue to recovery. The number of firms looking to bring production home is particularly welcome with the additional investment and jobs this could bring.

MAS Barometer findings and figures:

    • Featured more than 500 manufacturing SMEs from across England
    • 56% saw an increase in sales in past six months, a three per cent rise on the previous quarter
    • Two thirds of firms expect to grow between now and April 2014
    • 39% plan to take on new staff
    • 42% of companies are embracing new technologies
    • 51%are investing in new machinery and premises, 10% more from the same period last year
    • 26% showed concern around the cost of offshore production

The publication of the latest MAS Barometer marks the start of the first Manufacturing Matters week, which aims to showcase England’s manufacturing SMEs – a sector that currently accounts for more than 110,000 businesses and 1.1 million jobs.

In addition to this report, there will be other events held across the country with a specialist focus on access to finance, innovation, international trade and offshore wind.