FORGET the era of ‘Made in China’. The latest business phenomenon is ‘re-shoring’, where companies in America and Britain are bringing manufacturing home.
In the UK, the weakness of sterling has made the prospect of repatriating jobs even more alluring. Food manufacturer Symington’s is reported today to be moving its noodle-making operation from Guangzhou, China, back to Leeds, Yorkshire. The company, which also makes pasta sauce Ragu and Chicken Tonight, is creating 50 jobs in the process.
Henrik Pade, business development manager at Symington’s, tells the Financial Times it now costs “roughly the same” to make Golden Wonder pot noodles in Yorkshire as it does China.
“Everybody prefers to do manufacturing on their own doorstep rather than far away, which means you need to have a financial incentive to outsource”, he said. The firm said it had once cost 30-35 per cent less to make the noodles in China, but wage inflation there and freight costs had pushed up production costs.
Symington’s is just the latest company to try ‘re-shoring’. The FT notes that clothing manufacturers Top Shop and River Island have also been purchasing more materials from domestic suppliers.
The chief economist of the manufacturers’ association EEF, Lee Hopley, claims ‘off-shoring’ is now “yesterday’s model”. EEF figures show that 40 per cent of manufacturers have brought some of their capacity back to the UK, up from one in seven companies in 2009.
The phenomenon isn’t confined to the UK. BBC correspondent Mark Mardell reported on Radio 4 at the weekend how US manufacturing giant General Electric has repatriated jobs from China to its vast plant in Louisville, Kentucky.
According to Mardell, the changes are part of a “global rebalancing” of economies as Asia grows richer. US President Barack Obama highlighted the trend in his State of the Union address, saying: “After shedding jobs for more than 10 years, our manufacturers have added about 500,000 jobs over the past three”.
But while the repatriation of these jobs sounds positive, there is a downside – they tend to be poorly paid. As economist Julie Heath from Cincinnati University told the BBC: “The jobs that are coming back are typically lower pay, sometimes lower benefits, than the jobs that were lost.” ·
Source Article from http://www.theweek.co.uk/business/51967/re-shoring-companies-bring-production-home-china
