As business priorities are changed by shifting economic climates, many companies are reshoring their operations closer to home.
Nothing is certain, but the optimism in British industry is palpable. Jobs which moved abroad years ago may finally be coming home.
From software production to call centres and manufacturing, there are hints that UK companies could “reshore” jobs back to Britain.
Manufacturing in particular is likely to be affected. In March, manufacturers’ organisation the EEF released a survey showing that one in six companies had reshored production over the last three years, compared with one in seven in 2009.
It noted that companies had moved back from China and Eastern Europe in particular, citing concerns around product delivery and quality as the reasons for moving.
Madeleine Scott, a senior policy researcher at the EEF, believes the figures show where manufacturers’ priorities lie, as it becomes more important to make sure a product reaches its market quickly.
“I think it’s about companies and what they are competing on,” she says. “Manufacturers see the ability to respond to their customers quickly as extremely important.
“The price of the product is becoming less important and that has gone down the priorities. Quality is also a big aspect, particularly in the UK.”
Nick Golding, of the Manufacturing Advisory Service, is equally optimistic about the prospect of reshoring. “It’s happening and it’s strong,” he says. “We do see this starting to happen. Some of the anecdotal evidence shows that the focus was largely around shortening lead time to market.
“There was also more flexibility for those based in the UK. And some of it is around British heritage and the idea of the ‘Made in Britain’ brand.”
With names including the Raspberry Pi Foundation and Hornby moving some work back to the UK, reshoring is gaining a higher profile.
In a speech earlier this year, Prime Minister David Cameron even talked of plans to turn Britain into a “reshore nation”. But others are yet to be completely convinced.
Dr Jagjit Singh Srai, head of the Centre for International Manufacturing at the University of Cambridge, is working on data from the UK and other countries to decipher how solid the trend actually is.
While he believes firms are interested in, for example, ensuring short lead times, he is less optimistic than others that there is a definite move back to the UK.
“Reshoring isn’t anything new or significant, which is an amazing statement when you read the popular press,” he says. “There’s a bit of a political agenda, and it’s what developed countries want to hear.
“The data’s really unclear, but anecdotal evidence says reshoring is now a very hot issue. Firms are talking about it and considering more carefully whether it’s good to be at home or offshore.”
Location, he argues, could now be something companies look at more closely than before.
“People who have had a good experience [of moving operations abroad] are those who have thought it through and understood the transitions required,” he says. “Many firms in the 90s and early 2000s will have offshored as part of a bandwagon effect.
“But people who have offshored have come up with the issues of long supply chains, extended lead time to customers and risks taken in terms of product quality and other issues.
“There have been transparency problems in supply chains, as with the horse meat scandal.”
One certainty, though, is that any reshoring would mean more work in the UK. As Golding notes, “It’s difficult to say to what extent it’s happening, but what reshoring does it create jobs.”
It could also have wider implications for sectors such as manufacturing. A sudden increase in manufacturing activity could, for example, lead to short-term issues around skills. At the same time, it could cause the industry to up its game.
Scott says: “We have got a bit of a crunch around skills, and there may be a short-term skills gap.
“It would put pressure on the industry, but it might raise the profile of the issue and start building the appetite [to focus on skills].
“If we have more manufacturing in the UK, you would expect a virtuous circle of more investment, less reliance on imports and more capacity. This is what we need to rebalance the economy.”
Similarly, it could lead to a greater focus on highly skilled work in the UK, particularly in manufacturing.
Singh says: “Many products are increasingly less and less labour intensive, so to get to a country with low labour costs may have a big effect or may have no effect.
“The reshoring phenomenon should be bringing back highly skilled jobs – it’s not traditional manufacturing jobs.
“A number of reports have suggested that there are as many white collar jobs as non-white collar jobs. This means you will get a focus on high value in the UK.”
With studies ongoing, there is little conclusive evidence that jobs are coming back home. But any that do return are likely to get a warm reception.
Source Article from http://business-reporter.co.uk/2014/05/reshoring-back-to-the-source/
