The UK plastics industry is experiencing the benefits of re-shoring
Naomi Stevens of UK-based injection moulder, Amtek Plastics Ltd, writes for BP&R on how the company views re-shoring and manufacturing in the UK
The UK is seeing a considerable resurgence of re-shoring of products manufactured overseas. This resurgence has been encouraged by many triggers including issues with quality control, rising costs, environmental impact and slow lead times when companies use overseas manufacturers. Therefore, UK companies are starting to see the main benefits for using a UK based manufacturer instead of an overseas supplier.
According to the BPF, there are over 7,500 companies in the plastics industry in the UK with an annual turnover of £19 billion and employing over 180,000 people. This is set to grow dramatically after a survey published by Business Birmingham and YouGov revealed that almost a third (32 percent) of British manufacturing decision makers, who currently use overseas suppliers, will source more of their components from UK manufacturing companies over the next 5 years. This means that over 50 percent of UK manufacturers will boost their productivity and hire more staff. It is predicted by the RSA and Lloyds Banking Group that there will be 200,000 new jobs created as the UK is estimated to boost its international trade balance by £20 billion in the next 10 years.
Why is there a resurgence of UK re-shoring?
There are many factors that are influencing the increase in UK plastics manufacturing including the speed to market, quality control, flexibility to respond to customer requirements, shorter supply chains and no extra hidden costs.
The top factor for reshoring is the greater certainty that products can be delivered, turned around and manufactured in shorter times because there is no need for the long lead times whilst the products are being transported by air or sea freights.
The shorter supply chain by relocating manufacturing closer to home gives a higher certainty that risks and delays will be minimised because UK manufacturing eliminates the risk of natural disasters affecting international transport failures and delays from congested cargo terminals. By keeping all manufacturing in the UK there is 100 percent traceability of products and full ownership of all tools and products. It also means that a company’s intellectual property can’t be used in the black market to produce a product by a different brand or different manufacturer.
In the past one of the main reasons that companies moved their product manufacture overseas was to benefit from the lower costs due to the low wage costs compared to the UK. However, recently there has been a rapid increase in wage inflation; for example the average minimum wage in China has increased 12.5 percent per year since 2006, meaning that the costs are not as beneficial as they once were. It is not just labour costs that have affected the overall cost of overseas manufacturing, fluctuations in transportation costs, logistics costs, disruption costs and delays all have an impact on the final cost and price of a component.
What is in store for the future of UK plastics manufacturing?
The creation of skilled jobs, increased sales and higher profitability from a successful manufacturing sector in the UK will be a huge benefit to the UK economy. Although these benefits won’t dramatically affect most economic indicators, it will give the UK economy confidence in the industrial backbone of Britain.
Despite the increase in manufacturing, Britain will continuously be in competition with Europe and other Western countries that can be just as attractive to UK companies. In fact, UK manufacturing has its disadvantages which deter some companies, such as, the cost of energy which is considerably more than the US, as well as labour costs and strict planning regulations for companies who are looking to expand and develop. Therefore, to secure the UK’s future increase the UK and EU Governments need to create policies that support the growth of manufacturing. Plastic manufacturers need to remain competitive by ensuring that they are the best supplier by securing strong customer relationships by delivering on time, high product quality and flexibility to respond to a company’s changing requirements. Manufacturers also need to become more vocal about their services, industry successes so they can attract the right businesses and promote employment within the industry to the next generation.