SMEs bringing production home, says MAS

More than a quarter of respondents (26%) to MAS's latest 'Barometer' survey said concerns over the cost of offshore production was the principal reason for reshoring, followed by improving quality (20%) and reducing lead times (18%). However, the cost of domestic labour continues as the biggest barrier for producing within the UK according to manufacturing SMEs, with nearly one in 10 also concerned about the availability of the right skills. Steven Barr, head of the Manufacturing Advisory Service (pictured), said: "There is certainly a growing desire from our companies to take production home, with 15% of firms reporting that they have or are in the process of bringing production back. This is compared to just 4% that have off-shored in the last year. "This marks a major change in approach from five years ago when the Far East and Eastern Europe seemed to be the destinations of choice." He added: "Buyers have realised that there is more to the 'landing' price than meets the eye, with delays in logistics and issues around quality adding a whole layer of hidden costs. "It appears that bringing production back is having a really positive impact on the bottom line, with 68% of firms that have reshored in the past 12 months reporting an increase in sales." Business minister Michael Fallon said: "The number of firms looking to bring production home is particularly welcome with the additional investment and jobs this could bring." The Barometer, which featured the views of more than 500 manufacturing SMEs from across England, revealed that 56% enjoyed an increase in sales over the last six months – a 3% rise on the previous quarter. Two thirds of firms are expecting to grow between now and April 2014, while 39% are planning to take on new staff. There also appears to be a pattern of steady growth in companies embracing new technologies (42%) and those investing in machinery and premises (51%). The latter represents a 10% increase from the same period last year. Barr concluded: "We have seen a two-year high in the number of firms investing in new technologies and this tells us that manufacturers are not only optimistic about the next six months, but also have one eye on the longer-term picture… "There has been a slight reduction in the number of companies looking to recruit, which could reflect the fact many firms chose to retain skills during the recession and still feel they have enough capacity to cope with their anticipated expansion."