Reshoring Manufacturing to the UK
Backsourcing or reshoring is not just about bringing jobs back home. More often than not it’s based on sound economic business and social reasons.
The main two reasons are too reduce stock outs, the other to cut down on finance for stock levels. When it comes to manufacturing abroad there is often a simple consideration.
I make something half way round the world and then ship it into the UK. I have to keep large amounts of stock whilst the new stuff is on the high seas, 6-8 weeks if I’m making in the Far East If it gets here on time it might be damaged, through all the transportation. It may fail quality control then I have to wait for more to arrive. It may be held up by transport at either end, it could be delayed by customs and excise checks at the ports.
All of these delays cost time and money. I have to hold more stock on hand “just in case” anything goes wrong. This additional stock costs money, drives up the cash flow required to run the business and begins to make the case for reshoring manufacturing to the UK.
It’s no surprise therefore to see businesses thinking hard about what manufacturing abroad actually costs them. It isn’t just the cost to produce, it’s the costs of higher stock levels held. The cost of managing the failures which happen when incoming deliveries are damaged, held up, fail quality etc.
Therefore this trend isn’t about job protection; it’s about understanding all the costs of outsourcing.
Reshoring Manufacturing to the UK – media spotlight
Yesterday we found two stories about #UKMFG (the hashtag on twitter if you want to find UK Manufacturing stories) that involved business deciding to manufacture in the UK.
The first was from the BBC website; Bristol children’s suitcase design firm expands production from China to UK. The title says it all really, the company is doubling the size of its UK workforce by opening new production facilities when previously it had done so in China. The story laments the lack of support, funding, grants etc for UK manufacturing, however we should point out there is MAS, Manufacturing Advisory Service **who can help.
(** – MAS is now defunct May 2020)
It also talks of the reduction in tax allowances for capital spend over recent years.
The second story is much more under the radar but still worth noting; the ChillChaser brand of patio heaters is bringing manufacturing back to Scotland and will create 6 new jobs. This story was picked up by our Twitter feed so there isn’t anything about it on the website.
We’ll expand on why companies in all sectors are looking at this trend, in the coming months.
If your company is wondering if reshoring manufacturing to the UK might help then give us a call we can help you to understand the financial and performance impact of such a move.
This post was first published on our Lean Manager blog in the early 2010’s