Small Businesses ‘Bringing Production Home’

MAS Barometer Reveals SMEs Look To UK To Reduce Costs

25.11.2013

A growing number of small and medium-sized businesses are looking to move production operations back to the UK for reasons including cutting costs, according to the latest Manufacturing Advisory Service (MAS) Barometer.

The research revealed 15 per cent of firms have reported they have brought production back to the UK within the last 12 months or are planning to in the near future, compared to just four per cent looking to move production offshore in the next year.

While more than a quarter of respondents said cost cutting was behind their reason for reshoring, others cited an ambition to improve quality, shorten lead times and boost delivery performance.

Steven Barr, head of MAS, said the figures marked a significant change to the approach seen around five years ago when the Far East and Eastern Europe were “destinations of choice”.

He added: “Buyers have realised that there is more to the ‘landing’ price than meets the eye, with delays in logistics and issues around quality adding a whole layer of hidden costs.

“It appears that bringing production back is having a really positive impact on the bottom line, with 68% of firms that have reshored in the past twelve months reporting an increase in sales.”

The release of the latest MAS Barometer came after research by Experian suggested SMEs were not doing enough to take advantage of potentially lucrative export contracts.

Expert Opinion
After a few weeks where the focus has been on how SMEs can look to expand operations with exporting to international locations, it is interesting to see figures emerge which suggest that there is little appetite to move production to foreign shores.

"The interest in keeping production in the UK is very positive for our economy though and highlights that small businesses sense that opportunities are here to be taken.

"Growing firms have a huge part to play in supporting the continuing recovery being seen and – regardless of where their operations are based – quality, specialist legal advice is an absolute necessity if such companies are going to reach their potential.

"Expanding production and business in general can bring headaches in form of HR requirements, property needs and other issues. The right support cannot only reduce such problems but also ensure that growth occurs as smoothly as possible."
Steven Beahan, Partner