Manufacturers look to home in bid to boost profits
Many small and medium sized enterprises are bringing the manufacturing aspects of their businesses back to the UK to cut costs and improve quality.
Research from the Manufacturing Advisory Service suggested that this is the case, a significant shift from five years ago when manufacturing overseas was considered the better option.
The study showed that more than a quarter of SMEs who were questioned believed that costs for overseas production were higher, while 20% said they were returning to improve the quality of their goods.
Meanwhile, 18% thought that basing their manufacturing programmes in the UK represented an opportunity to decrease their lead times.
Production in other areas of the world requires consideration of oil and flight prices, while it is no longer considered as efficient to be working in China and elsewhere in the region.
This has driven up costs for manufacturing abroad, so in a bid to manage their finances many companies are considering their options.
Cutting costs and improving authenticity
Two immediate examples are evident, notably Hornby, the toy train manufacturer, and Trunki, the range of children’s travel products, are both in the process of returning their manufacturing processes to the UK.
Measures such as these may be part of a corporate restructuring process or simply a means of cutting unnecessary costs – a vital part of business.
It also comes at a time when many SMEs have expressed concerns over the costs of running their businesses.
Using manufacturers in the UK also enables products to maintain a uniquely British feel to them, a factor which several leading companies have looked to exploit.
At the same time, the companies involved in the process must also believe that the products can be successfully crafted in the UK at the right costs.
While the UK cannot offer the same levels of flexibility that are available in China, the authenticity that comes with a UK brand gives many companies an edge.
By Phil Smith