One in six firms have brought work back to Britain from overseas in the past three years in a trend towards “re-shoring” production, according to a new study.
The EEF manufacturers’ organisation said a survey of 271 companies showed that most work was being brought back from China and Eastern Europe.
The main reasons were improved quality, delivery and logistics costs, while one in six firms were also switching to a UK supplier for parts and components.
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.
“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.”
Cipriano Beredo, of law firm Squire Sanders, which helped with the study, added: ” Companies in both the UK and the US that have previously off-shored low cost production may no longer be reaping the same benefits.
“While moving any manufacturing across borders is a significant decision for management, the report shows that this is not motivated solely by cost, but often to improve the quality of what is being produced and enhance customer service.”
The report was published ahead of the EEF’s national conference in London tomorrow, at which Business Secretary Vince Cable will explain how the Government is supporting re-shoring.
He will also announce the latest winners from the Government’s Advanced Manufacturing Supply Chain Initiative, a £245 million fund that is helping companies to strengthen their UK supply chains.
Nine projects are expected to receive £129 million of support, with £53 million of government funding leveraging in more than £75 million of private money.
The projects will directly create 1,369 jobs and safeguard a further 2,525.
Winners are expected to include Bicester-based Clearview Traffic Group, a market leader for solar powered road studs which offer 10 times greater visibility of the road ahead than traditional ‘cat’s eyes’.
Mr Cable said: “Britain winning back business on the basis of quality and good performance is a good characterisation of the sort of industrial strategy that I have been promoting. We are now seeing a number of encouraging signs of production returning to the UK.
“The Government will continue to encourage the trend, creating the climate needed for business, domestic and international, to manufacture here. The supply chain funding we are providing is helping to rebuild British manufacturing prowess which we will exploit to bring more work to these shores.”
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