UK manufacturing growth down to clients reshoring back home

Looking back at the end of 2017, it has been well documented across the media that UK manufacturing is on the up with a large amount of overseas trade coming back to the UK. The shift began partly because of the need to speed up order times, improve service and in some cases, trade in on the ‘Made in Britain’ image. This has had a big impact on work returning to the UK in 2017 and as a result, we are expecting to see high UK growth within the manufacturing sector going into 2018. Clients that I have spoken with advised me that output, orders and employment, are also expected to rise due to buoyant market conditions with export markets going from strength to strength.

Reshoring is the process of returning the production and manufacturing of goods back to the location from which they were originally offshored, and the main influences for clients reshoring operations back to the UK is down to a number of factors including;
  • Cost - it isn’t as cheap as it once was to make products overseas. 
  • Wages - rising wages in Asia means that companies have seen their costs increase, which makes UK workers more competitive. 
  • Warehousing - costs of warehousing, insurance and damaged goods, but most notably the adverse exchange rates on imports has also had a strong effect. 
The consequences of producing these products overseas and the cost of new-product development, leads to the response from clients to bring back production to the UK. In 2018, clients will be focused on getting better at making more of what hasn’t yet been ordered, while having less capacity to make what is needed to meet customer demand. More emphasis will be put on driving production improvements, reducing irrelevant or ‘redundant’ inventory and using more, traditional batch production techniques.

What will this mean to UK manufacturers?

Supercar maker McLaren announced plans in February for a £50m hi-tech factory in Sheffield and according to the Automotive Council, 44% of all parts used in cars manufactured here are now from British suppliers. That is up from 41% in 2015.
Cadbury will be bringing back the production of Dairy Milk bars to the UK after making them in Poland for a period, and US owner Mondelez, who has a Bournville factory in Birmingham,  announced plans to pump £75m into the plant. Production of Cadbury Dairy Milk Oreo and Cadbury Dairy Milk Tiffin will also be moved from Germany to Bournville.
While there is plenty of speculation regarding the effect that Brexit negotiations will have, there is also a wave of growing optimism for UK manufacturing heading home.
Glyn Dobb
Business Director, Michael Page Engineering & Manufacturing
T: +44 114 263 6028