In the past few years more than 60 UK manufacturers have lost
patience with their Chinese suppliers and brought production
back home. Few seem to have regretted the move.
Back in 1999 the renowned toy maker Hornby joined many other
British firms and closed its factory, in Margate, Kent, with
the loss of 400 jobs. All manufacturing of Scalextric, Corgi
and Airfix models moved to China. But this failed to turn out
as well as hoped. Problems with its main supplier left Hornby
unable to meet demand for train sets. Chinese wages kept
rising. A rapid jump in oil prices led to rising transport
costs.
In 2012 Hornby decided to move an initial 10 per cent of
production back to Britain. Under the plan, Airfix Quickbuild,
a new model aircraft range, is being manufactured in a plant in
Newhaven, East Sussex. Richard Ames, Hornby’s chief executive,
believes having production a lot closer to the head office has
enabled the company to adjust more quickly to changes in
demand. “It’s more important to secure the supply chain than to
squeeze every last dollar out of the price,” he says.
Hornby’s experience is far from unique. It adds to evidence
that so-called “reshoring” could provide a boost for UK
manufacturing over the next few years, even if the scale of
investment and new jobs is limited by negative factors
including serious skills shortages in areas such as precision
engineering and manual craft skills.
Finding high-reliability suppliers is a vital part of the
reshoring movement
But reshoring must overcome many hurdles. It often involves
companies re-starting production from scratch. A prospective
“reshorer” must locate a source of raw material, identify a
suitable manufacturer and make sure it employs a skilled
workforce with a reputation for quality. In Hornby’s case, it
teamed up with Plastech, also based in Newhaven, and a supplier
of tooling and injection-moulded parts.
Mark Thompson, Plastech’s head of UK operations, turned out to
be a big fan of the Airfix brand. The Quickbuild project
resulted in improved quality, reduced lead times, next-day
deliveries and flexible stock holding. Plastech is producing
8,000 kits a week in what has become a reshoring success story.
Interestingly, the Hornby case study shows that contrary to
what is often assumed, price – specifically rising wage costs
in China – has not always been the number one factor in
reshoring British production. Instead, the priorities have been
to secure better control over the supply chain, ease of
communication and a greater focus on quality.
Doug Liversidge, chairman of Yorkshire-based Surgical
Innovations, is thankful his company took the decision to bring
production home from China. He said “Our directors were away
for 10 days at a time, often returning exhausted. It was
becoming a never-ending management headache. Bringing
manufacturing back from China has paid off for us. We have
since trebled our workforce here in Leeds and our quality has
significantly improved.”
Manufacturing experts foresee significant opportunities for UK
manufacturers in sectors such as heavy building products, which
are becoming too expensive to transport from China, and in auto
components, given the recent strong growth of leading UK-based
car producers including Jaguar Land Rover and Nissan. However,
today a “British-built” car typically contains only one third
of locally sourced parts. The remainder has to be imported.
Huge opportunity for new production in automotive components,
says car producer Jaguar Land Rover
If this figure could be increased to 60 per cent it would
represent an opportunity for component suppliers worth up to
£2bn a year in extra sales. Dave Allen, purchasing director for
JLR, says: “The current success of the UK automotive sector
presents a renewed opportunity for automotive suppliers to
invest in the UK, and to increase local sourcing of the
high-value components that the UK’s world-class vehicle makers
require.” Accordingly, companies such as auto components maker
manufacturer RDM expect to develop new business, on the basis
of re-shored production from China. Coventry-based RDM recently
opened an advanced engineering centre, creating 25 jobs, and
aims to increase annual sales from about £10m last year to £25m
by 2018.
Outside the vehicle industry, a lot of hope is being pinned on
reshoring textiles production, once one of Britain’s greatest
industries Here, there are many problems: a dearth of
manufacturing facilities with modern tooling equipment; an
ageing workforce; seriously undercapitalised firms; and often
relatively small sales in home markets. But there are some
grounds for optimism.
Take Camira Fabrics, which supplies hard-wearing fabrics for
office chairs and seats on trains. Long-dissatisfied with the
quality of foreign-made textiles, Camira created a joint
venture with Holmfirth Dyers, like Camira based in West
Yorkshire. The result was Park Valley Dyers, the first dye
house built in Britain for almost 20 years. Helped by
investment in modern machinery, the joint venture is turning
out high-quality fabric to feed into the UK supply chain,
providing jobs and saving the need for imports.
At the luxury end of the market is handbag manufacturer
Mulberry, which employs 650 in the UK. Most of these employees
are in two plants near Bath, Somerset, with the second having
opened last year. Output from the new factory has meant the
“UK-made” proportion of handbags and other items sold by
Mulberry has risen. But the biggest obstacle to making a
success of this has been the shortage of craft skills. Novice
fabric cutters, for example, can require months of training to
achieve a consistently high standard.
Finance director Roger Mather says: “The key challenge is
finding the high-level craftsmanship needed. We have had to
train workers from scratch and the government has contributed
£2.5m under the Regional Growth Fund. When you are buying into
Mulberry, you are buying a bit of England: Made in England is a
very powerful selling point.”
Most surprising of all, perhaps, was the notion that a low-cost
yet sophisticated consumer electronics product could again be
manufactured in bulk in Britain. Production of the Raspberry
Pi, a £16 computer designed to help children learn how to write
code, was switched from China to Britain, says co-founder Eben
Upton, when “we discovered we could build at the same cost in
the UK”.
The challenge is to find the required levels of craftsmanship –
handbag manufacturer Mulberry
Manufacturing of the products is now taking place at a factory
in Pencoed, Wales, run by Sony, the Japanese electronics group.
The move has created 70 jobs. Such has been its success that
the plant has increased output from 18,000 units a week to
80,000.
Mr Upton adds: “[The Sony plant’s] expertise in rapid
prototyping and production engineering has allowed us to
proceed from first prototypes to full mass production over a
period of less than four months, with an unprecedented level of
confidence in product quality and delivery schedules.” It is
doubtful whether that would have been possible if production
had been sited in China.
A report last year by EY, the consultancy, was guardedly
optimistic. “In the right conditions, reshoring could bring
£15.3bn of [value-added output] to the UK economy, equating to
315,000 jobs,” the study said. While this may take time, sales
of British-made products have been growing among consumers in
Asia, Africa and South America. Many of these people are
increasingly eager to buy goods associated with status and
quality – and they often equate these characteristics with the
“made in Britain” label. If this trend continues, it could
provide another boost to the overall re-shoring momentum.
