Executive Briefings

Companies Begin Moving Production Back to the United Kingdom

Manufacturers increasingly are moving production back to Britain as shoddy quality and higher freight prices are undermining the cost advantage of producing goods overseas, according to an article in the London Times.

A report into the state of the manufacturing sector finds that one in seven companies surveyed had moved production back to the U.K. from abroad in the past two years. The survey was conducted by EEF, the manufacturers' organization and accounting firm BDO.

Many British manufacturers have outsourced production to countries with lower labor costs, in Eastern Europe or Asia, in the past decade, a trend that has accelerated as an increasing number of British companies have fallen into foreign ownership.

But higher freight, energy and commodity costs have increased the expense of production overseas, while the recession has put pressure on companies to re-evaluate decisions on location.

The EEF's survey of manufacturers presents an unexpectedly optimistic picture of the U.K.'s manufacturing base in a year when headlines have been dominated by concerns for jobs at Corus, BAE Systems and Vauxhall, some of the country's biggest manufacturers.

The EEF reports that nearly seven in 10 companies agree that the U.K. is a competitive location for their manufacturing activities.

Tom Lawton, head of manufacturing at BDO, said: "The recession has made companies look at their whole supply chain and their costs. "It will not be a flood back [to the U.K.] but quite a few companies are saying that it is possibly better now for us to source locally." 

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Manufacturers increasingly are moving production back to Britain as shoddy quality and higher freight prices are undermining the cost advantage of producing goods overseas, according to an article in the London Times.

A report into the state of the manufacturing sector finds that one in seven companies surveyed had moved production back to the U.K. from abroad in the past two years. The survey was conducted by EEF, the manufacturers' organization and accounting firm BDO.

Many British manufacturers have outsourced production to countries with lower labor costs, in Eastern Europe or Asia, in the past decade, a trend that has accelerated as an increasing number of British companies have fallen into foreign ownership.

But higher freight, energy and commodity costs have increased the expense of production overseas, while the recession has put pressure on companies to re-evaluate decisions on location.

The EEF's survey of manufacturers presents an unexpectedly optimistic picture of the U.K.'s manufacturing base in a year when headlines have been dominated by concerns for jobs at Corus, BAE Systems and Vauxhall, some of the country's biggest manufacturers.

The EEF reports that nearly seven in 10 companies agree that the U.K. is a competitive location for their manufacturing activities.

Tom Lawton, head of manufacturing at BDO, said: "The recession has made companies look at their whole supply chain and their costs. "It will not be a flood back [to the U.K.] but quite a few companies are saying that it is possibly better now for us to source locally." 

Read Full Article