SMEs are “bringing production back home”

More than 15 per cent of SMEs either have or are in the process of bringing production back to Britain, compared to just 4 per cent that have offshored production in the last year.

The research, published in the Manufacturing Advisory Service’s latest Barometer, shows that the reasons for reshoring production to the UK are to reduce cost (26 per cent), to improve quality (20 per cent) and to reduce lead times (18 per cent).

The cost of domestic labour remains the biggest barrier for producing within the UK, however.

“There is certainly a growing desire from our companies to take production home,” says Steven Barr, head of the Manufacturing Advisory Service.

“It marks a major change in approach from five years ago, when the Far East and Eastern Europe seemed to be the destinations of choice. Buyers have realised that there is more to the ‘landing’ price than meets the eye, with delays in logistics and issues around quality adding a whole layer of hidden costs.”

According to the Barometer, which features the views of more than 500 manufacturing SMEs from across England, bringing production back has a positive impact on their bottom lines, with 68 per cent of firms that have reshored in the past 12 months reporting an increase in sales.

“These findings are another sign that the economy is heading in the right direction and that confidence is returning as we move from rescue to recovery,” says Business Minister Michael Fallon. 

“The number of firms looking to bring production back home is particularly welcome with the additional investment and jobs this could bring.”

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