Why British Firms Are Bringing Production Home

1 In 6 UK Firms Turn To British Suppliers In Last 3 Years


Small and medium enterprises (SMEs) based in the UK appear to be benefited from the growing "reshoring" trend.

A new study conducted by EEF - the manufacturers' association - has shown that one in six companies have brought production back to Britain from overseas in the past three years.

In addition to this, one in six businesses said they are now using UK-based suppliers.

Around six per cent of firms have outlined their intentions to reshore parts of their organisation in the near future, which will be a boost for SMEs further down the supply chain.

Prime Minister David Cameron recently encouraged more manufacturers to relocate their facilities back to the UK from China and other Asian nations.

He commented: "I think there is a chance for Britain to become the 'Reshore Nation'."

The EEF report highlighted some of the main reasons for this ongoing trend.

84 per cent of firms stated that Britain's positive reputation for quality was a leading factor behind their decision to relocate, while 35 per cent felt the standard of their goods would be better if they were produced in the UK.

Logistics have also proven to be an important consideration. More than half of enterprises (56 per cent) said overseas delivery schedules from their suppliers did not fit in with their current business models.

Around one in four (23 per cent) companies highlighted supply chain disruption and 16 per cent identified labour cost benefits as leading reasons for reshoring.

EEF chief executive Terry Scuoler suggested the reshoring trend might be gradual, but it is "highly encouraging" nevertheless.

"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," he commented.

Mr Scuoler added that it is now down to the government to introduce measures that encourage more firms to invest and sell products in the UK.

Expert Opinion
The trend of reshoring is a welcome one and a prime example of the kinds of opportunities which are likely to arise for small businesses as the economic climate continues to improve.

"It is also interesting to see such trends emerging after other research in recent weeks has suggested that smaller firms themselves were considering expansion and growth in overseas markets as potential options across the coming months and years.

"However, regardless of where their future may lie, the key issue for small businesses is to ensure they are well-placed and prepared for any potential growth they may see in the coming months – whether it is having advice to hand on taking on new staff or taking up larger commercial premises.

"Legal support is a vital part of this and we would urge smaller firms which are seeing new opportunities to seek advice as soon as possible."
Fergal Dowling, Partner