For decades the move to overseas manufacturing was seen as inevitable, the attraction of cheaper foreign-made goods proved too strong and caused manufacturers to shift their production abroad in order to become more cost effective. This has had a devastating impact on domestic manufacturing, which declined from about 30% of national GDP in the late 1970s, to 14% before the recession, to just 11% today.
But British manufacturing may be heading for a genuine revival as more UK companies choose to swap their international suppliers for UK-based ones and move more of their operations back to the UK. Recently we have seen a string of high-profile names publicly profess their conversion to manufacturing in Britain. John Lewis recently announced its aim to increase sales of UK products by at least 15% over the next three years to £550m. Even Tesco has now suggested it is keen to source from British farms, and has started investing in British agriculture to boost its competitiveness.
But it is the SME community that has been driving the British manufacturing revival. A survey by the Engineering Employers Federation (EEF) found that 40% of British companies had brought at least some of their production back to the UK. With SMEs accounting for 57% of all UK manufacturing.
Why are SMEs sourcing more of their goods from the UK?
Smaller retailers have always been relatively tied to UK-based manufacturing but it’s in recent years that they have become much more willing to promote this. Now the larger companies can see the benefits this is having and are now trying to promote themselves as ‘British’ companies.
According to the Department of Innovation, Business and Skills, the underlying international trend has been encouraged by growing wage rates in China, as well as the increasing price of oil, which have pushed up transportation costs. The government has also put resources into smaller-scale UK manufacturers, recently giving £200m to promote technology innovation and a further £300m to boost high-tech learning and research. Even more has been done to boost regional growth funds, which encourage the growth of smaller-sized UK manufacturers.
What are the benefits of UK manufacturing?
The UK is known for high quality standards which is usually represented through the price. Price fails to be a factor when choosing suppliers now and this means companies are turning their backs on overseas suppliers. British products can more expensive, but that is not the point, what is important is to have a reliable product that delivers.
For example the UK have a strong competitive advantage in the aerospace market, companies wanting economical components where quality is not of great importance, can find these abroad where prices are kept to a minimum. The aerospace industry is turning to UK suppliers in order to gain the quality and reliability that is required for this dynamic sector. As technology advances, the demand for high quality will become ever-more stringent and make it even more important to know exactly where your parts come from.
The trend is linked to the growing demand for environmentally-friendly and socially-responsible products, which has endured even as the economic crisis continues. A recent study showed that the number of Brits willing to pay more for such goods tripled in two years, rising from 8% in 2011 to 25% today.
It’s not just Britain that is responding well to British-made goods. They can be a pull in Europe, the Middle East and Asia, especially when it comes to higher-end luxury goods like cars or designer clothes. UK-made goods are seen positively overseas and it helps exports in the EU and particularly in the Middle East.
So what does the future hold for British-made products?
The combination of consumer demand and the changing global marketplace means that new companies are increasingly considering manufacturing in the UK right from the start. As more orders are placed and more interest is shown, it is likely more manufacturers will rise up to fill the demand.
The UK has some real strengths, and UK manufacturers need to play to them. The country has a wealth of technical skills and knowledge, as well as a strong history of innovation. Innovation is the key to the UK’s success. By harnessing UK employees’ technical abilities, and developing strong research and development capabilities here, UK manufacturing organisations can use innovation to achieve a unique competitive position.
It is firstly essential to invest in innovation, whether that means investing in specific technology, facilities or (most importantly) people; giving your employees the skills they need to innovate. As well as training in the short-term, this means building a sustainable pipeline of talent. Manufacturing have been overlooked in careers advice for years and the marketplace does not always contain the right skills. So organisations need to be willing to encourage young people into the industry and help shape them into the next generation of innovation in order to avoid the situation of a skills gap in engineering.
The UK manufacturing sector is vibrant, exciting and in much better health than some would lead us to believe. The Recession has brought the nation together and now Britain have become avid promoters of UK manufacturing.