Reshoring - the company story

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On Monday, we blogged on the main survey results in our new report Backing Britain: A manufacturing base for the future. A quick recap in case you missed it...

Quality, customer service and brand reputation top the areas of competitive advantage for UK manufacturers

Aspects of the UK business environment are strongly supportive of these competitiveness strategies

One in six companies has reshored production in the past three years

Quality and delivery times are driving reshoring decisions

Gains in profitability and employment are seen as a result of reshoring - especially in the supply chain

As well as the survey results we also gathered some great stories from manufacturers themselves about their experiences with reshoring - whether as a reshorer or as a recipient of reshored work - and they are below. Some interesting accounts of why reshoring was the decision to make and how it is benefitting the companies.

Caldeira UK Ltd

Caldeira UK Ltd, one of the world's fastest growing home textile companies and the UK's market-leading cushion company, has brought back to the UK several production lines that were previously manufactured in China. Rising costs of labour in China mean that the company's UK factory is able to compete with China on products with a lower-labour cost component and, as such, the products Caldeira has reshored have tended to be more expensive.

The move allows Caldeira to bring the production process closer to key markets and customers and to have more control in its supply chain. Barriers and issues arising from language and cultural differences have also been reduced. More than that, though, is the ability to add the ‘Made in Britain' brand to more of its products, and customers have shown interest in new product ranges to take advantage of this brand.

While it is still too early to know the full impact reshoring has had for the company, Tony Caldeira, Managing Director, does expect the move to pay off for the company. So far Caldeira UK Ltd has taken on twenty new staff as a result of reshoring.

Furthermore, as more businesses reshore and more customers look to use British-made products, UK supply chains will be boosted over time, and Caldeira expects this to translate into more sales and faster growth for the company.

Martin's Rubber Company

An industrial rubber manufacturer based in Southampton, Martin's Rubber Company, has seen first-hand the shifting trends to and from low-labour-cost producers. The company has been part of the offshoring trend – providing a design and development service for a customer who would ultimately source the manufactured product from an Asian supplier. The firm has also seen it go wrong for customers who have put price above quality, consistency and service.

Now the company is seeing a steady trickle of customers looking to come back to the UK. Martin's Rubber Company is receiving more enquiries from companies looking to switch to a UK supplier, with the most commonly cited reasons being lead time, variable quality and communication breakdown, which Martin's, competing on technical expertise, flexible manufacturing and exceeding customer service expectations, can more than overcome. It has already secured business from overseas and is manufacturing a product in the UK which was previously made in China.

This trend could make a difference for Martin's Rubber Company, if it can balance playing to its quality and service strengths with being price competitive. Support for its capital investment plans and lower-cost energy are two policy changes that would make a difference.

Elite Electronic Systems Ltd

Based in Enniskillen, Northern Ireland, Elite Electronic Systems Ltd is a provider of contract electronics manufacturing services to customers all over the world.

In 2005, Elite made the decision to source cables from China, which previously were manufactured in Enniskillen, with the expectation of large cost savings. After a lengthy process to select a Chinese partner, which included several trips to China and selecting, auditing and validating potential suppliers, a partner was chosen.

Initially things were good and the process ran smoothly, although even at an early stage lead times were an issue, and in order to shorten times Elite shipped components to China.

However, various issues started to emerge in the course of time: product quality decreased, costs started to increase, lead times increased, shipping times and costs increased, and communication difficulties were also increasing. As a complete service provider, Elite also found that an elongated supply chain made coordination with customers difficult, and prototyping and product development was also proving challenging. The project was making small savings, but at what cost?

Concerns were further magnified during the global downturn, when a culmination of issues meant that the firm went from carrying two months' worth of stock to twenty months' worth. This resulted in cash-flow issues, component and product obsolescence, and warehousing costs.

Meanwhile, back in Northern Ireland, Elite had invested in new, more-efficient equipment and, through lean manufacturing, had developed more-efficient processes. It was clear they could now manufacture at home and still be competitive without compromising other vital criteria like quality, time to market and customer service. The company could also maintain process and supply chain control, have better visibility and minimise risks.

The decision was made to reshore.

Author

Senior Policy Researcher

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