North West Manufacturing: Offshoring losing its appeal
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MANUFACTURERS in the North West are increasingly seeing the benefits of returning production to the region.
The simple fact is that costs abroad are rising, mostly driven by pay increases in countries that had previously been described as ‘low wage economies’, such as China.
The Manufacturing Institute’s Adam Buckley said: “China’s labour rates have increased over five years at the same percentage rate as ours did over 50. Production has moved further and further into China as businesses are looking for cheaper production.
“But the world is not flat it is round – you can only outsource so far before you are back on your own doorstep.”
It is by no means the case that all manufacture that was lost to low cost economies will return – it makes sense for a very significant number of products to continue to be produced overseas.
But some companies are seeing other advantages to maintaining operations closer to home.
Quality control, lead times and shipping costs are just some of the factors leading firms to reconsider plans to move production overseas or even return it to the UK.
David Ost, regional director for EEF, said: “For that bit in the middle, we are starting to see a drift back to the UK. A number of companies have talked to us recently about it. Most were chasing cheap economies for production but a number of those are starting to think about coming back.
“There is a trend that companies are looking to source locally if they can. There is risk and volatility to a geographically large supply chain. With long lead times, for example, if there are faults, it can be another eight weeks.”
