Re-shoring is a reality, says Business Birmingham report
BRITISH manufacturers are to hire more staff to cope with an expected surge in demand caused by a “re-shoring” of production to the UK, according to a report from inward investment programme Business Birmingham and YouGov.
Almost a third (32%) of senior decision makers from the British manufacturing industry who currently use overseas suppliers say their business plans to source more components from UK companies over the next five years.
Rising costs overseas (59%), and simpler transport and logistics (51%), were amongst the most widely cited factors by the 41% of respondents who reported that the UK is becoming more attractive as a manufacturing destination compared with locations abroad.
The survey by has revealed more than half (51%) plan to boost production capacity in the UK in the next five years and nearly two-thirds of these (56%) say they are likely to hire more staff.
Wouter Schuitemaker, investment director at Business Birmingham, said: “Re-shoring can help us rebalance our economy, create new jobs and cut our trade deficit. It’s vital that we back our manufacturers and pull out all the stops to support those who are bringing manufacturing home.
“The West Midlands sits at the heart of the UK’s manufacturing sector, and the strength of our supply chain and R&D means that when companies like Jaguar Land Rover are looking to invest and grow in the UK, they know we can match their ambitions.”
The research supports evidence of the re-shoring trend, which is seeing manufacturers respond to rising costs in countries such as China by bringing production back to the UK. Since China’s WTO accession in 2001, real wages paid in the manufacturing sector have risen by almost 200% in US dollar terms.
Rowan Crozier, sales and marketing director of Birmingham-based precision component manufacturer Brandauer, said: “Not so long ago, the relative cheapness of components made abroad was the overriding factor considered by large producers in the UK.
“Fortunately we continued to invest in our people, and as prices have increased in China and elsewhere we’re primed for a surge in demand due to the knowledge and experience of our staff.
“The Government and others need to ensure that there is proper investment in skills to make sure that producers across the supply chain can always get the talent they need to expand.
“We firmly believe that re-shoring will see more manufacturing coming back to the UK over the coming years, which can only be good news for the economy as a whole.”
Lee Hopley, chief economist at EEF, the manufacturers’ organisation, said: “We are hearing more reports of companies looking to source materials and other services in the UK. This is another sign of industry’s growth potential and builds on the latest positive indicators from Monday’s PMI.
“There are many reasons for a shift back to Britain, including improving the security of supply chains, the focus on innovation and quality and the rise in employment and transport costs in emerging economies.
“But whatever the reason, policymakers need to make sure the UK is a competitive location for investing in modern machinery and innovation, if we are to capitalise on this trend.”