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Production moves back to UK

Manufacturers are moving production back to the UK amid concerns about poor quality and higher freight costs, a report has said.

One in seven companies has moved its manufacturing operations to the UK from abroad in the past two years, a report by the Engineering Employers’ Federation and accountants BDO said.

The EEF said the UK had become “increasingly competitive and efficient” over the past few years.

“Many companies have taken advantage of the low-cost emerging markets, both as market opportunities and also as a means of reducing costs,” the EEF’s chief economist Lee Hopley told the BBC. “If you look at how UK manufacturers compete in global markets, it’s about quality, it’s about customer service and it’s about delivery times.

“If lower labour cost producers can’t provide what they need when they need it, then the alternative is to produce in-house and bring production back to the UK, which some are clearly doing.”

Many UK firms have outsourced production in the past decade to countries in Eastern Europe or Asia, where labour costs are lower.

But the EEF’s survey of 300 manufacturers showed that firms were now returning production to the UK for a number of reasons: cost savings failing to meet expectations, a poor quality of goods produced and the slow speed of getting products to market.

Nearly 70% of companies said the UK was a competitive location for manufacturing, up from 43% two years ago.

Lee Hopley said: “As we look ahead to 2010 - where growth is actually going to come from in the UK economy - I think a lot of that is going to be export-driven as world trade picks up and the global economy returns to growth, and obviously manufacturing plays a big part in that.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .