Watching the 10 o’clock news last night on BBC iPlayer I was encouraged to see the story about British companies bringing work back to these isles after many years of offshoring.
The benefits of offshoring from a British business point of view are obvious – If you can cut costs by using foreign workers on a lower rate of pay then it makes perfect sense to help boost your bottom line and keep the shareholders happy.
The flip side of offshoring has been that Britons have lost their jobs, customer service levels in the service industries have been questionable at times and manufacturing across the other side of the world has a certain amount of “lag” to it, not to mention differences in working conditions, health & safety etc. I’d add that the exporting of certain roles abroad have meant that skills in this country have been lost and that makes the reintroduction of certain jobs harder to implement.
However, I’ve always said that whilst production is offshored to developing countries, what happens when they start to become developed countries? Once these countries grow their own economies and get a taste for the lifestyle enjoyed by “the west”, then they will start to become like us and then a certain parity starts to kick in. That certainly seems to be the case, according to the BBC news story.
The example they use is of a factory in Sussex making plastic parts for Airfix kits. Mark Thompson, Head of UK Operations at Plastech, said that wage rises in China and India were making it easier for his company to compete. The Beeb’s Hugh Pym says that “it’s a trend that’s gathering pace” and that’s a very good sign. He cites Hornby, the iconic train set makers who own the Airfix and Scalextric brands, who are looking at bringing more of their production back to British shores. One good reason for doing so is that turnaround times are much quicker.
Roger Canham, the Executive Chairman of Hornby gives the example that picking up the phone and asking for an additional shift from workers at a UK manufacturer can give him the perfect response time he needs for increasing stock levels. He states that he can have new stock on the shelf within a week whereas the reliance on Asia has meant a four week wait.
Made in Britain
There’s also a sense on national pride when you see something that is made in Britain. As a child I remember that Airfix kits were always British-made and it was only in the 1980s or 1990s when I noticed a kit had the words “Made in France” on the box. I have nothing at all against foreign-made goods but for such an iconic and traditionally British brand to made over the English Channel was a bit of a let-down.
Other high-profile offshoring operations have included the famous Bendicks chocolates being made in Germany, Twinings teas getting bagged in Poland and HP Sauce being bottled in a factory in Holland. Such quintessential British brands seem to lose a certain quality in my opinion. It seems that we’ll lose that certain je ne sais quois for the world-renowned London black cab if the company’s new Chinese owners decide to make the next generation of the iconic black cab for distribution and sale worldwide.
If you need another example of a well-known brand “reshoring” then look no further than Trunki, makers of the charming little suitcases for kids. In 2012 the company decided to bring manufacturing of their product back to the UK after six years of making their goods in China.
Rob Law MBE, Trunki’s creator and designer, said that it had been a dream of his to have Trunki made in Britain. His reasons for originally not doing so were mainly down to expense but as the Pound devalued against the US Dollar and Chinese labour costs started creeping up, it became easier for him to consider returning production to the UK.
Since May 2012 Trunki has been produced in Devon and Rob Law says that whilst British manufacturing costs may have been more than in Asia, there were other tangible benefits to having home-made goods.
The tide of change is reflected in the quiet launch of the Reshore UK initiative back in January, a joint venture between UK Trade & Investment (UKTI) and the Manufacturing Advisory Service (MAS). According to MAS some 1,500 manufacturing jobs have come back to these shores since 2011 and the reasons cited include reducing costs (26%), improving quality (20%) and shortening lead times (18%).
So let’s hope this trend of reshoring does return even more production to UK shores so that we can boost our economy and provide jobs and income for more people – it makes sense not just economically but socially too.
Tags: business, economy, localism, manufacturing, offshoring, reshoring