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Manufacturing Is Coming Back To The UK

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So says Vince Cable at least, claiming that manufacturing is being reshored. I'm not as confident as he is about the gross effect of this in the long term but it's undoubtedly true that the basic trend is correct:

Vince Cable has heralded the prospect of British manufacturing “becoming great again” as he revealed that twice as many small and medium sized manufacturers are bringing production back to the UK as are sending work overseas.

In what will be viewed as a boost for the British economy, Mr Cable, the Business Secretary, disclosed details of a new Manufacturing Advice Service (MAS) survey which shows that 11pc of respondent’s reshored production to the UK in the past 12 months, against 5pc who had sent production overseas.

It's a little less exciting than he's said there, as these figures are only for extant companies moving production around. They make no mention of companies going out of business altogether to be replaced with imports, nor of companies setting up abroad from the beginning instead of at home: and it's those two that have been the main driver of the deindustrialisation of Britain, not extant companies moving production around.

However, he does have a point in that even this part of the trend has reversed.

As an example of the sort of thing that is happening many manufacturers have realised that it's great to have the cheap prices of the Far East, but there are also different advantages to having production close to the market. For example, the fashion chains get their clothes made up in China or Bangladesh: but they have to order 6 months in advance and it also takes 30 days for the production to be transported. This is fine when you are ordering for the season ahead: but what happens when you find you've a hit on your hands and you need more in mid-season?

The answer is that you can't actually go to the Far East: the system's just not set up to do that. So, they purchase their top up supplies from factories closer to home, in places like Portugal. Turn around times there are perhaps a week and transport perhaps 3 days. The logic of this is so compelling that people are now setting up schmutter factories in the UK to be able to be even more reactive.

This may not be what everyone quite means when they think about manufacturing but it is indeed what is happening.



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