Midlands manufacturing set to spearhead UK growth

A RESURGENT manufacturing sector in the Midlands will spearhead economic growth nationwide as businesses bring production back to the UK, a new study has predicted.

Venture capitalist EV said it had seen an increase in recent months in the number of companies looking to re-establish more manufacturing facilities in the region to enable them to respond more rapidly to changes in market demand.

Jonathan Diggines, chief executive of EV, which has an office in Birmingham, said other factors were also at play including the need to improve control over quality, protect intellectual property and reduce working capital.
 
He said many UK businesses were also looking to shorten their supply chain.

“We are seeing companies starting to question the seemingly automatic, knee-jerk decision to outsource production to the Far East. Instead, they are seeking funding to support or re-establish manufacturing in the UK – perhaps as a dual sourcing exercise at this stage,” said Mr Diggines.
 
“Rising freight and labour costs are making Asia less attractive as a manufacturing location, however,  the critical factor for the firms we have spoken to, is the long lead time involved in bringing stock and vital components from the Far East.

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“Current tough market conditions mean that businesses must be able to act quickly, to grasp any opportunities that arise – often to beat the competition to exploit a niche, which will not sustain a six-week delay.”
 
Jaguar Land Rover, BMW, Toyota and Nissan are large-scale international businesses which have committed to new plans for manufacturing in the UK during 2011. EV said it now felt many smaller firms would follow suit, in order to improve speed of reaction and quality, and to maintain control over valuable intellectual property rights.

“Local manufacture allows firms to be far more flexible and responsive to customer demand – which can be vital when the market is so unpredictable,” added Mr Diggines.

“They don’t have to take the risk of carrying too much stock. They can also respond more quickly to rapidly changing circumstances. Many of these businesses are in industries where trends and fashions play an increasing role and, in these economic conditions, they must be able to react and operate in an environment of continual change.”