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‘Made in Yorkshire’ - reshoring generates positive outlook for manufacturing companies in Yorkshire

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Recent years have seen many UK businesses outsource their production operations abroad, particularly to China, India, Asia and Turkey.

But, as with many aspects of business, in some areas we are now seeing an about-turn – as the economy is recovering, so businesses are reviewing the business case for repatriating their manufacturing to the UK which bodes well for manufacturing companies in Yorkshire.

Mainly affecting manufacturing businesses, this previous ‘offshoring’ trend had been largely driven by lower labour costs in emerging markets, enabling manufacturers to be more competitive in the global market place. Now, however, with rising labour costs in these economies, combined with IP protection concerns over quality control, lead times and customer service are prompting many businesses to re-evaluate where they manufacture their products and the implications are that manufacturing companies in Yorkshire will be among the main beneficiaries.

Outsourcing production is not as economical as it was in its heyday when we were seeing companies announce on an almost daily basis that they were moving operations to China or other BRIC countries. After transport costs, customs duties and other fees have been factored in, the competitive advantage is not as great as it once was. According to EEF, the manufacturers’ organisation, one in six British companies reshored operations between 2011 and 2014. Of the 300 businesses they surveyed, 49% cited improved quality and reduced delivery times as driving factors in moving production.

At Clarion, our experience across the manufacturing sector means we appreciate the importance it plays in the UK’s long-term prosperity. Research by EY estimates that reshoring could add a further £15.3 billion to the country’s GDP and an additional 315,000 jobs over the next ten years. And Yorkshire is likely to be one of the regions to reap the greatest rewards with 37,000 new jobs expected.

Hornby has recently brought its Airfix production back to the UK, having outsourced it to China ten years ago. The return has come about largely due to rising wages and the company is now looking at bringing back other brands as they’re seeing further benefits in terms of supply chain and responsiveness. Similarly, the Merseyside-based cooker manufacturer, Stoves, has brought much of its production back to the UK, noting that the country is becoming more competitive, and being ‘British made’ is part of a major marketing campaign for the company.

Aside from rising labour costs in the emerging markets, UK manufacturing is benefiting from increasing efficiencies. For example, where 100 staff might be needed in China to do a job, albeit on a lower wage, in the UK it may take only 65 people to do the same job due to advances in robotics and automation. UK industry is embracing automation and Lean Six Sigma – by removing waste and increasing productivity, we’re driving improvements in manufacturing and creating precise customer value. Based on efficiencies, the gap with China is closing and many businesses are finding they would gain greater benefit from having closer control over quality, lead times, supply chains and, ultimately, their brand reputation.

Labour costs and supply chain issues aside, many companies are seeing other benefits to manufacturing in the UK. Varying fuel costs mean that many foreign manufacturers are unwilling to commit to transport costs in advance, making it difficult for companies to make fully-informed decisions. Expertise and innovation in the UK is also overtaking that of China. But it is important that this competitive advantage is nurtured and for industry and academia to work together to identify new innovation for improving processes, creating new products and developing break-through technologies.

The Advanced Manufacturing Research Centre in Sheffield, South Yorkshire, for example, came about as the result of collaboration between the University of Sheffield and aerospace giant Boeing. The resulting world-class centre of excellence now uses the same collaborative research model, not only within aviation but also cutting technologies and nuclear innovation. This cluster, based on expertise in these areas, has acted as a catalyst for drawing inward investment from OEMs and major tier 1 manufacturers such as Boeing, Westinghouse and Rolls Royce. Traditional sectors, such as textiles, are also revisiting their business models in response to technological breakthroughs. Leeds University recently spoke at a Clarion textile conference about how, historically, the textiles sector outsourced polluting dying processes to China. New technology, however, has dramatically improved the dying process and reduced pollution, opening up the possibility of repatriating the process to the UK and back to manufacturing companies in Yorkshire .

Advances in technology are also enabling better customer communications and helping to streamline supply chains – all of which improve lead times, efficiency and responsiveness. Longer lead times from outsourced operations leaves companies vulnerable to the vagaries of changing consumer demands. Overseas manufacturers aren’t able to respond quickly to changes in demand and product launches are far slower than in the UK. Leeds-based food company, Symingtons, is benefiting from reduced lead times – from 10 weeks to less than two – since moving its noodle production back from China in 2013 to a £15 million facility in Hunslet.

Bringing operations back to the UK gives greater control over the supply chain, allowing businesses to be more responsive to changing customer demand and consumer habits. UK manufacturers are also better able to offer customised products, something that is not embraced by China. Overall, businesses are benefiting from greater flexibility, improved customer satisfaction and retained business. In addition, manufacturing products overseas can also increase the risk of IP being breached with copycat products.

The prestige of products being made in Britain is not to be under-estimated. For many, being ‘Made in Britain’ is synonymous with excellence and quality. So much so that the ‘Made in Britain’ marque is being used to promote British manufacturing in the UK and overseas. For companies such as South Yorkshire based BST in Doncaster, one of the world’s leading suppliers of metal detectable and x-ray visible products widely used in the food industry, they consider the marque adds value to their products and is associated with quality in the eyes of their customers. Similarly, flame-retardant fabrics and flooring manufacturer, West Yorkshire based Halifax’s J&C Joel, is also a supporter of Made in Britain and renowned for celebrating its British heritage and values. Sofaworks, whose products are handmade in Britain, are also promoting their ‘Best of British’ campaign, designed to highlight the skills of their upholsterers, the quality of their products and the adaptability of their production processes to provide bespoke services.

Reshoring is an integral part of Government policy and the ‘Reshore UK’ initiative aims to promote the business case for reshoring and provide access to advice, support and funding. Although reshoring is currently mostly affecting the manufacturing industry, the services sector is also expected to follow suit, particularly in R&D and telecoms.

However, we must not be complacent. Whilst Government support is certainly improving, other developed countries, such as the US, France and Germany are vying for this reshored investment. Those businesses relocating are largely capital-intensive industries, such as aerospace and automotive, which are reliant on a skilled workforce and for whom quality and brand reputation are imperative. Government and business must work together to ensure a re-balancing of the economy between sectors and across the regions. We also need to invest in the right kind of highly-skilled workforce so that we are ready to meet the needs of our manufacturers returning home.

For advice on reshoring or looking for suitable manufacturing companies in Yorkshire then please complete our contact form and we will be in contact shortly.  

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