UK Manufacturing Comes Home

Mark Grayson
The tide is beginning to turn for some parts of the UK manufacturing industry, as more businesses consider relocating their production operations back to domestic shores.

Many companies are now reconsidering where best to make their products. After years of shifting production to lower-cost countries, there are signs of a return to the UK in some sectors of the economy.

As offshore operations begins to look less attractive, the UK’s manufacturing heritage has an opportunity to re-establish itself. Certainly, the government intends manufacturing to play its part in self-sustaining economic recovery. The challenge is to convince manufacturers that the UK can compete on safe working practices, location costs, quality, delivery speed and customisation.

As offshore operations begins to look less attractive, the UK’s manufacturing heritage has an opportunity to re-establish itself.

The reshoring initiative is driven by rising overseas labour and transportation costs, and a search for better control of quality and of the supply chain. Just-in-time processes are typically more feasible with a shorter supply chain and when manufacturing geographically closer to the point of sale. There are also advantages in co-locating production and R&D.

It’s a gradual but encouraging trend. One in six companies reshored its manufacturing in the last three years [1], compared with one in seven in 2009. If it’s here to stay, it’s good news for the UK. Reshoring has the potential to create 100,000 to 200,000 extra UK jobs over the next decade, in sectors from textiles and advanced manufacturing to business support services, telecommunications and R&D [2].

The government is obviously keen to emphasise the benefits for companies. These include a relatively stable economy, competitive corporate tax rates, a good regulatory environment and strong legal frameworks.

UK Trade & Investment (UKTI) has developed inward investment plans for each of the 24 Enterprise Zones in England, to help them attract global companies. A Local Investment Showcase ‘one-stop shop’ will enable investors to search the assets of every Local Enterprise Partnership, Enterprise Zone and City Deal, and to compare local sector strengths.

The labour market will need more attention, however, if reshoring is to become a serious long-term economic strategy. Lack of investment means that key skills have been lost and there are too few experienced UK manufacturing engineers in particular. Other countries also offer very attractive incentives.

The construction industry in its current form will also struggle to respond to the huge capital investment anticipated by the government. Major infrastructure projects are tying up resource over long periods of time, potentially creating a capacity problem for manufacturing and other project delivery. The skilled labour workforce is a specific concern. These are challenges that current and successor governments need to address.

Reshoring has the potential to create 100,000 to 200,000 extra UK jobs over the next decade...

In the meantime, a rush to create support / incentive organisations is under way. UKTI has joined forces with the Manufacturing Advisory Service (MAS) to launch Reshore UK, a service to help companies bring production back to the UK. Part of MAS’s role is to ensure capacity in the UK supply chain, to take advantage of the reshoring opportunities.

Faithful+Gould is well placed to support inward investors and domestic clients who are exploring reshoring options. Reinforced by our relationship with our parent company Atkins, we remain committed to the manufacturing sector, leading a wide range of global projects.

Our integrated project and programme management approach encompasses a range of services. We lead lifecycle investment appraisals and find the best deals for our clients, making sure that any government incentives are explored. With close relationships in UKTI, our knowledge is up to date and supports a lateral thinking perspective.

UKTI has joined forces with the MAS to launch Reshore UK, a service to help companies bring production back to the UK.

For many companies, the biggest challenge is the availability of good development space in the UK. Our extensive knowledge of Enterprise Zones aids UK-wide site selection. We help clients navigate the government incentives for brownfield site development, advising on site selection and purchase, costs, implications and scheduling of remediation, and subsequent procurement and implementation strategies.

Designing the manufacturing facility properly is crucial and our early input ensures that the design team thinks beyond the building. Working with our clients to fully understand their manufacturing process, we ensure that their built assets will support their process. This optimises production layouts to suit the manufacturing operation. The building can then be designed around the production needs, including flexibility for future-proofing.

We’re backing the UK – ready to help domestic and inward investors get the very best from their project.

References

1 EEF, 2014, Backing Britain, a manufacturing base for the future.

2 PwC, 2014, Reshoring – a new direction for the UK economy.

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