British companies bring production 'back on-shore'
By Melanie Defries Tuesday, 14 August 2012
Around 40% of British companies have brought production home to ensure a consistent supply chain, new research has shown.
The survey of 150 companies found two-fifths were bringing production back home as a result of the global downturn and recent natural disasters.
It said that events such as these had brought "into sharp focus" the challenges of weak links in the supply chain or the impact of sudden disruptions on revenue and productivity.
Larger companies were more likely to have brought production back inhouse, with 55% of companies having done this, compared to 39% of smaller companies. The report attributed this to the resources, space and capabilities of larger firms in comparison with smaller companies.
Many companies who said they wanted to increase their use of local suppliers were unable to do so, the survey found, due to a lack of available capacity.
An earlier EEF report found that three-quarters of manufacturers said they were satisfied with the quality of UK suppliers but a quarter were concerned about capacity of suppliers in this country.
The survey findings were hailed as a potential boost for British manufacturing which, according to Office of National Statistics (ONS) figures, has slid back into recession.
EEF chief economist Lee Hopley said: "In recent years, manufacturers have been hit by a host of unforeseen events, which has seriously tested their supply chain monitoring and business continuity planning.
"This can also create opportunities to re-shore production and rebuild key manufacturing with companies bringing some production in-house and using local supply chains."
The research found that the average manufacturer has almost 190 suppliers, virtually all have some of their supply base located overseas and for one in five companies at least half of their suppliers are based outside of the UK.
EEF spokesman Mark Swift said that companies were shifting their focus from overall cost to other areas, such as potential disruption to their supply chain.
"A lot of manufacturers want their production to be geographically closer for a whole host of reasons. These include greater co-operation between companies through the supply chain so that they can co-operate in areas such as research, innovation and production and development.
"Inflation in developing countries is also a factor – the cost differential is not as great as it once was and not as significant once you factor in things like environmental concerns and transport costs."
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