The great manufacturing debate

Now in its sixth year, the NMD brought together high-profile keynote speakers representing the global manufacturing landscape to debate how we can best develop the capability for effective reshoring to the UK.

Reshoring is increasing in UK manufacturing, driven by shifting consumer preferences; a reduction of the wage gap with emerging economies; increasing quality concerns; volatile international transport costs; concern for the environmental impact, and a desire by management to better control quality and supply chain risks.

Chaired by distinguished engineer, Lord Alec Broers, the morning session included several impassioned speeches fuelling food for thought for the afternoon’s debate.

Lord Broers’ reference to the potential job opportunities reshoring could create fed into an observation by Paul Sloman – Partner at PricewaterhouseCoopers LLC – that 30 years ago, 20% of the workforce was employed in manufacturing, 2014’s figure was just seven per cent.

Though none of the speakers could agree on the definitive number of jobs reshoring could potentially create, all estimates were in the hundreds of thousands; with Sloman quoting the Manufacturing Advisory Service’s 2013 Barometer which showed that 14% of businesses reshored some activities as opposed to 11% that offshored.

Chairman of the Advanced Manufacturing Supply Chain Initiative (AMSCI) investment board, David Kynaston agreed, but added that, for the moment at least, “The trend is just a trickle, rather than a flood.”

John Cridland, director general of the CBI, appeared to sum up the sentiment of many present by saying that until recently, the reshoring debate “tended to be one of speculation, rather than being seen with your own eyes”. However, times are changing.

He added, “For me, reshoring is all about our indigenous strengths in people, ideas and materials. These are all strong, organic reasons to promote reshoring and help our own companies to become more competitive.”

However, Cridland warned that in a world of choice, “The UK can’t afford to stand still if it wants companies to reshore operations in the long-term. Industry and our new Government have to work together to make domestic supply chains both viable and resilient.”

His comments that, “There is too much focus on research and not enough on development”, and that, “We need to create an innovation culture that is both competitive and world leading,” chimed with CEO of the High Value Manufacturing Catapult, Dick Elsy, who remarked, “Though it can be hard to reshore production, it’s even harder to get R&D back once it goes.”

Elsy also observed that, “Retaining production through significant productivity improvements may prove more effective than bringing it back to the UK in the long run,” but that we would only achieve step change improvements in productivity through ‘technology innovations’.”

He added that, “The UK is becoming increasingly confident that it not only has the research and innovation capabilities, but the technical expertise to leverage them both effectively.”

All agreed that industry’s ability to generate long-term economic growth, wealth and stability was finally being recognised, and though the benefits of reshoring aren’t guaranteed, the potential prize is worth the risk of encouraging it. 

UK reshoring capability

The afternoon’s debate was overseen by The Manufacturer’s own Nick Hussey, who prefaced proceedings by noting, “Reshoring is a hot political subject in many developed economies, but increasingly so in the developing world as they seek to protect fledgling manufacturing businesses from the effects of reshoring.”

Brexit

Opening the floor to the audience, the question over whether or not Britain should remain part of the European Union sparked a unanimous response from the panel with all in favour of staying, though equally all strongly agreed that reform was needed moving forward.

Dick Elsy gave the Catapult perspective, noting that the centre supported aerospace in particular, a sector for which Europe plays a significant role in terms of funding and knowledge sharing, among other factors.

“Business doesn’t respect geographical borders, it simply moves where the market is. Europe is an important market for the UK, why put that in jeopardy,” said Cranfield’s Iain Gray.

Though Clare Marett remained impartial, she made it clear that both the EEF and the CBI had explicitly expressed that staying within the EU was an absolute must for those they represent.

Bringing everything back

David Kynaston responded to the question over whether or not manufacturing has to be done in the UK by saying, “We all know that extended, global supply chains are here to stay, but what we want is for that which is relevant to the UK to stay in the UK.”

Adding that, “It has to make economic sense and be sustainable in the long-term, reshoring for just three years for example is futile.”

Gray noted that it didn’t always come down to purely financial reasons, often there was a community aspect being considered in terms of both local and national responsibilities.

Though some manufacturing is never likely to be reshored, knowing – and crucially, understanding – the pros and cons was cited as being fundamental.

Quality

If any negative perceptions regarding the quality standards of UK manufacturing exist, what can be done to address them was put to the panel next, with Gray stating that “archaic” opinions may have to be faced, but opinions are far easier to change than addressing any actual “industry failings”.

He also commented that we not only have to get better at promoting manufacturing, but become more aware of whether or not the message is being heard.

As an American perspective, Harry Moser described how collating and documenting successful reshoring case studies helps to make identifying trends easier, as well as creating a repository for the media to source success stories from.

Decision makers

The question of who was ultimately responsible for the judgement to reshore versus offshore arose next, fuelled by the concern that too many of the key decision makers don’t sit around boardroom tables.

Kynaston provided an apt quote from his time spent working in Japan, “You should never allow someone who hasn’t got control over the current process to define the direction of the next,” adding, “We may have an issue of leadership here which has to be expeditiously addressed.”

Energy

In the face of seemingly constant hikes in energy prices, shouldn’t we be focusing our efforts on consuming less overall, rather than simply lowering the cost? Many of the panel agreed that such a shift could be more future-proof and the UK, as a developed nation, should be doing everything in its power to reduce energy consumption, both commercially and residentially.

Though something certainly worth considering, it would appear the shift is already underway, with the current focus on creating a more circular economy and the increasing digitisation of processes.

Elsy commented that more efficient manufacturing is the direction we are heading in, a path being pioneered by Catapults the likes of his HVM, “The new technologies we are working on are using less energy as a criteria from the outset. It just makes sense to do that nowadays, irrespective of whether the cost of energy is high or low.”

Skills shortage

With John Cridland likening the nation’s skills shortage, particularly across STEM subjects, to a “car crash in slow motion” earlier in the day, the panel agreed that the negative ramifications of our past emphasis and drive towards A-levels and universities was – and is – clearly being felt by industry.

The landscape is changing though, according to the sentiment in the room, with the stigma surrounding apprenticeships and vocational pathways steadily being eroded a positive sign.

However, one audience member strongly lamented the continued absence of women engineers and manufacturers in industry, and the lack of young women becoming engaged with STEM.