Business Secretary Vince Cable will give more backing to efforts to “rebuild British manufacturing prowess” this week by providing millions more in funding to help firms to bring back production from overseas.
Mr Cable’s announcement to the EEF manufacturers’ organisation tomorrow comes as the industry body publishes evidence that more manufacturers are now “reshoring” production to the UK as the advantage of low-cost centres like China diminishes.
Prime Minister David Cameron launched a campaign on the issue at the World Economic Forum in Davos with a new one-stop shop – Reshore UK – established between UK Trade & Investment and the Manufacturing Advisory Service (MAS) to help firms bring production back home. UKTI has identified 1,500 manufacturing jobs reshored since 2011. A recent MAS survey shows companies citing costs, quality and reducing lead times as the top three reasons for moving production back.
Mr Cable is set to unveil nine more winners of £53m in grants from the Government’s Advanced Manufacturing Supply Chain Initiative (AMSCI) – a £245m fund designed to help companies strengthen UK supply chains – creating a potential 1,400 jobs.
He will say: “We are now seeing a number of encouraging signs of production returning to the UK. The Government will continue to encourage the trend, creating the climate needed for business, domestic and international, to manufacture here. The supply chain funding we are providing is helping to rebuild British manufacturing prowess which we will exploit to bring more work to these shores.”
The EEF’s report, “Backing Britain”, finds concerns over the quality of goods manufactured overseas, the need to speed up delivery times, and rising foreign wage bills has prompted one in six firms to bring all or part of their production to domestic suppliers over the past three years.
The findings come weeks after luxury car maker Aston Martin was forced to recall thousands of cars after discovering that a Chinese subcontractor was using counterfeit plastic to manufacture accelerator pedals. The pedals are now being replaced by a UK-based supplier.
Although the bulk of the 271 firms surveyed have maintained overseas production, more firms intend to reshore, the EEF said. China is the most popular country to move production back from, followed by Eastern Europe, it found.
EEF chief executive Terry Scuoler said: “The trend may be gradual, but it’s highly encouraging to see more reshoring continuing. While it will always be two-way traffic, the need to be closer to customers, to have ever-greater control of quality and the continued erosion of low labour costs in some competitor countries means that in many cases it makes increasingly sound business sense.”
More than half of respondents – 56 per cent – said the schedules from overseas suppliers were less suited to the shorter delivery times now demanded by customers. It found 40 per cent of companies saw rising turnover as a result of moving production back to the UK whilst profits and employment have increased for 60 per cent.
But the organisation is pushing for the Government to keep UK energy costs at or below the EU average and encourage skilled workers. Mr Scuoler added: “It is now key that government policy supports the most competitive business environment possible.”