An increasing amount of hype in recent years has focused on the business of reshoring, including two separate reports in the last week alone. Yet, while industry observers are keen to highlight the opportunities offered by a return of apparel manufacturing to the UK, it seems reshoring is far from a done deal.
‘Made in the UK’ or ‘Made in Britain’ are terms we are more than familiar with. So much so that it feels as though the tide really is beginning to turn.
Indeed, Government figures last week revealed the UK textile and clothing industry is worth nearly GBP9bn (US$13.71bn) to the country’s economy and is experiencing year-on-year export and domestic growth.
A further report out today (17 February), from Ernst & Young (EY), claims reshoring presents a GBP15bn “once-in-a-generation” opportunity for the country’s economy, supporting some 90,000 to 100,000 jobs.
More long-term, a report by PwC early last year suggested that over the next ten years, the reshoring of textiles and apparel has the potential to increase annual output by something in the order of GBP1-2bn (at constant 2012 prices), with corresponding job impacts of around 31,000 to 62,000 by the mid-2020s.
Fantastic news. Particularly for a country that, like most others, was hard hit in the last recession.
Steve Wilkinson, UK & Ireland managing partner, at EY believes clothing will be one of the sectors most likely to consider relocation due to its capital intensive nature. “They will be businesses where quality and brand are important and consequently the supply of a highly skilled workforce is imperative,” he noted.
In that respect, it should be pointed out that just 5,000 new jobs were added in the UK textile and clothing sector in 2014, many of those in traditional areas such as yarn-spinning, knitting and weaving, and making-up (Cut Make Trim/CMT).
In addition to a growing workforce, Britain also benefits from capabilities in more modern areas such as technical textiles, materials and composites.
Sourcing trends are also acting in the UK’s favour, as the rationale for buying from far-away countries has weakened in recent years as buyers look for shorter lead times to fulfil fast fashion trends.
All of these indicators suggest manufacturers would be crazy not to capitalise on such an opportunity. And some certainly are, with anecdotal evidence the ‘Made in the UK’ movement is gaining some momentum.
Upscale fashion brand Jaeger has created a dedicated team to ramp up domestic sourcing, Marks & Spencer has launched ‘Best of British’ men’s and women’s wear collections, and sock maker Roy Lowe & Sons has moved to restart some UK production.
Online fashion retailer Asos last year backed the expansion of a training programme – Fashion Enter – designed to rebuild skills in the UK clothing manufacturing industry. And UK fit specialist Alvanon has launched a ‘Fashion Fit Movement’ that donates tools and consultancy to local manufacturing centres.
Barriers to growth
On paper, the figures offer interesting reading. But in reality, to what extent can the manufacturing of apparel and textiles in the UK really grow?
While the sector employed an estimated 100,000 people in the first quarter of 2014, this is in stark contrast to the 800,000 employed in the sector in the late 1980s. Taken more broadly, around 2.6m people work in manufacturing in the UK, accounting for just 8% of jobs and around 10% of national output.
While the cost advantages of producing goods in the developing world are narrowing, wages are still significantly below those in the UK. Indeed, the desire to produce higher quality items with speed of delivery and lower transport costs is overshadowed by the fact that manufacturing costs per hour in western Europe are around 15 times higher than in some developing countries.
Other barriers include high energy costs and skills shortages. In the US, the former has boosted reshoring thanks to the shale energy revolution lowering costs. This has mitigated higher wages, making reshoring more appealing here. The country also benefits from a more flexible labour market.
The UK Government, meanwhile, has certainly taken some important steps to ensure the UK remains an attractive place to invest and start a business. In March last year, it set up a GBP245m government supply chain fund to help rebuild British manufacturing prowess. Non-profit organisation, The Alliance Project, has also been set up to examine the potential for repatriating textiles manufacturing to the UK.
Restoring workshop status
While the UK apparel industry is certainly showing signs of growth – albeit from a small base – it exists in a dynamic and competitive environment. Given the right incentives, however, the apparel sector could see a high proportion of its manufacturing reshored.
Investment in research, innovation and upskilling could offer a more appealing image of a sector that is often perceived as a ‘sweatshop’ industry. There is a need for manufacturing to be made sexy to a whole new generation of workers.
Mark Gregory, EY’s chief economist, adds: “While steps have been taken to make the UK more attractive to businesses looking to reshore such as reducing the headline rate of corporation tax to the joint lowest in the G20, providing competitive reliefs for innovative and high tech industries, and UKTI’s ‘Britain is Great’ campaign, more can be done.”
For decades in the nineteenth century, British manufactured goods dominated world trade. The textile industry in particular saw massive changes in technology, resulting in dramatic productivity growth, which ultimately led to a steep decline in prices. For a time, no other country could compete, and so Britain became the workshop of the world.
The idea that Britain could once again hold such a title sadly seems unlikely given the challenges it needs to overcome. But given time, investment, and the commitment of every player along the supply chain, the UK textile and apparel industry certainly has the potential to place its marker on the global apparel stage once again.
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