Manufacturing in the UK isn’t what it once was. Manufacturing used to comprise more than a quarter of Britain’s GDP. Now it’s down to around 10 percent and falling. The decline has occurred as a result of several factors. The first is the rise of China and the Far East, churning out products at a fraction of the cost in the West. The next is the fact that services have continued to grow in value relative to manufacturing. And finally, regulation and currency manipulation have made manufacturing uncompetitive.
But is that about to change? Are we on the cusp of a new manufacturing revolution in the startup era?
Costs Are Coming Down
David Cox is a manufacturer based in the UK. He says he’s noticed a trend. In the past, manufacturing overseas was impossibly cheap. Chinese labour cost next to nothing, meaning Chinese product was very competitive. But now wages in China are rising thanks to a reduction in the supply of labour. And finally, prices of Chinese goods are going up. This is leading to a return of manufacturing to traditional Western markets. What’s more, the UK still has many of the skilled technicians it needs from legacy manufacturing. This means that it is in a great place to produce new, high-quality products using Doosan machines.
Shelley Lawson represents a bicycle manufacturing company. She says that the government is playing a big role in increasing manufacturing in the UK. The government often funds viable manufacturing ventures in deprived areas to stimulate job creation.
Local production means that the logistical challenges for the company are fewer. Lead times will be reduced and stock easier to manage.
Julien Callede of made.com has argued that it makes sense to manufacture in the UK again. The standards here, according to Callede are much higher, and it’s easier to get good products to market. Callede says that his company tried to source a new rug from China. But he found that the rug simply didn’t have the quality expected by his customers. It took more than two years to source quality rugs.
Callede says that manufacturing in the UK means that he gets the product he wants faster and without shipping delays. Again, this helps to reduce lead time and gets products to market faster.
The Challenges That Remain
None of this should be taken to imply that the challenges of manufacturing in the UK no longer exist. They do. One of the biggest problems manufacturers are facing is the fact that they now have to form many more supplier relationships than before. When companies manufactured in China, often one or two suppliers were enough. But in the UK, most companies have to form multiple supplier relationships. Frog Bikes, for instance, had to use over 60 to get all the parts that they needed.
It might be a cultural change, but there’s no doubt businesses are rethinking their far-East strategy. Is it still worth going overseas to get things made? Probably not for much longer.