British manufacturers are bringing back production to the UK in a “reshoring” push to try to address the supply-chain chaos caused by the coronavirus pandemic and Brexit.
Three-quarters of companies have increased the number of their British suppliers in the past two years, according to a survey by Make UK, the manufacturers’ trade group.
Almost half of companies said they intended to further boost their UK supply base in the next two years. Conversely, more than 10 per cent said they planned to reduce reliance on Asian suppliers over the same period.
Make UK said successive economic shocks, including the war in Ukraine, were forcing manufacturers to reverse the decades-long move to offshore supply chains as producers were increasingly facing delays in the arrival of components and materials.
The breakdown in the critical just-in-time supply-chain processes meant UK companies were turning away from sources of lower-cost production in Asia to suppliers closer to home, it said.
Verity Davidge, director of policy at Make UK, said the era of globalisation might have passed its peak “with disruption and volatility for global trade fast becoming normal”. She added: “For many companies this will mean leaving just-in-time behind and embracing ‘just-in-case’.”
Officials in Whitehall are increasingly concerned about the resilience of the British economy to future macroeconomic shocks, according to business leaders, with food, manufacturing and energy sectors the biggest worries.
Make UK is calling for a cross-industry and government-backed task force to assess the resilience of the UK’s supply chains and draw up an action plan to protect the economy from any future significant disruptive events.
The boost to domestic supply chains will also help meet the government’s levelling-up and skills agendas given the geographic spread of the UK’s biggest manufacturing centres outside London and the south-east.
Matt Lacey, sales and marketing manager at HV Wooding, a British manufacturer, said that more UK-based companies were using his company as a subcontractor as they shifted production away from Asia.
“There was a race to the bottom on pricing but the perceived cost benefits of manufacturing overseas are not what they were. People are now looking more at flexibility around order volumes and lead times.”
Katie Reed, marketing manager at BEC Group, a toolmaking and plastic-injection manufacturer based in the south of England, said the group had seen a “massive” increase in demand in the past month from companies seeking to reshore their operations.
“People have no idea when things are coming in. They want to shore up their supply chains,” she said.
Make UK’s study reveals that more than 90 per cent of manufacturers said the pandemic had disrupted supply chains, with a similar number citing Brexit as a cause.
Andrew Kinder, who leads the industry team at Infor, the business cloud software firm that worked on the survey with Make UK, said: “Long-held beliefs in lean, just-in-time [processes] and offshoring are being questioned as volatility and uncertainty replaces predictability and reliability.”
Manufacturers have also increased the number of different suppliers to give more options in the event of further disruption.
Stephen Blythe, business manager at Jaltek, a UK contract electronics manufacturer, said companies could benefit both from shorter delivery times from domestically produced goods and materials as well as the more skilled workforce.
Source: Economy - ft.com
