Reshoring of manufacturing continues – EEF/Squire Sanders survey

'Backing Britain – a manufacturing base for the future' has revealed that one in six companies has re-shored production back to the UK in the last three years. This compares to one in seven in 2009. The UK based supply chain is also benefitting from this trend with one in six companies turning to a UK supplier for parts and components. The EEF said this gradual trend was set to continue with 6% of companies saying they are planning to re-shore production in the next three years. EEF chief executive Terry Scuoler said: "The trend may be gradual but is highly encouraging to see more re-shoring continuing. While it will always be two-way traffic, the need to be closer to customers, to have ever greater control of quality and, the continued erosion of low labour costs in some competitor countries means that in many cases it makes increasingly sound business sense." He added: "It is now key that government policy supports the most competitive business environment possible so that we continue to see more high value innovative manufacturers invest in and sell from the UK." According to the survey, 84% of companies see the UK's reputation for quality as an advantage to being based here. The main reason for re-shoring production is to improve the quality of products and components, cited by 35% of companies. This was closely followed by certainty and speed of delivery, alongside minimised logistics costs which were cited by approaching one third of companies. Over half (56%) of companies said that their delivery schedules from overseas suppliers did not fit with their shorter order books. Other main reasons cited were risks of supply chain disruption (23%) and the erosion of labour cost benefits (16%). The EEF said companies were seeing clear, albeit moderate, benefits from re-shoring production with 40% of companies having seen their turnover increase as a direct result, whilst only 3% had seen a fall. Furthermore 60% of companies had seen profits and employment increase, again albeit to a moderate extent The benefits are also flowing down into the supply chain with 37% of companies receiving an order in the last three years from a customer for a product previously sourced from a low cost competitor. Companies in the supply chain also reported benefits to turnover, profit and employment, again to a moderate degree.