Member Article

You think UK manufacturing is dead? Think again

It’s manufacturing focus week on Bdaily and we’re looking at the debate around the UK sector.

Looking at the latest economic news, it’s easy to get the impression that the current downtown has hit the UK engineering and manufacturing industry hardest. The doom and gloom brigade, proclaiming that offshore manufacturing in low-cost countries is outstripping our home-grown capacity, has manifested the perception that local manufacturing is dead. Yet, when looking more closely at the trend of companies opening new offshore manufacturing facilities, it becomes apparent that in fact this business strategy entails growth opportunities that increase the local customer base.

Plexus is a global design and electronics-manufacturing company, with the majority of its European manufacturing facilities based in the UK. When we expanded our manufacturing capabilities to Romania four years ago, it was generally assumed that our UK product manufacturing facilities would have to be reduced because customers would naturally opt for a low-cost manufacturing solution.

In fact, quite the opposite happened: The available path to low-cost manufacturing attracted people to engage with our business on a local level. The comfort level of local manufacturing is very appealing to customers, particularly in the initial stages of the life-cycle, where ironing out the early-life problems that you often face with a new product is paramount. However, once a product has matured and become more stable, the focus shifts towards a lower-cost model.

For some time, the electronics market has seen a vast number of businesses expanding manufacturing operations into lower-cost markets. Not only to improve their global footprint but also to provide the capability to move products around the globe to be where the customers’ end markets are located.

With this strong on-going requirement to reduce costs, there is a point at which off-shoring becomes a viable solution. Today we are convinced that if an electronics-manufacturing partner is unable to offer the low-cost solution for the long-term, companies will simply not engage in any short term projects.

Manufacturing companies can achieve benefits of lower cost for a portion of the assembly, while having final system integration performed within the end product region in order to drive lower logistics costs. Subsequently both our UK and Romania facilities gained business following the initial expansion, so much so that our UK capacity has subsequently been increased.

This highlights how a company can utilise multiple manufacturing facilities to their advantage, driving the total lowest landed cost even if the market for the end product is within the UK.

Expanding into Eastern Europe has proved a real boost for us, winning new customers who are initially interested in local manufacturing capabilities, with the long-term plan to move to lower cost locations. Not every manufacturing business does have to adopt this option, but in the current economic climate customers need to see a logical path to low-cost solutions in the future.

This was posted in Bdaily's Members' News section by Willie MacKinnon .