AN EYE ON RESHORING


A series of views from John Swain, Chairman of the Anopol Group


Is ‘reshoring’ the complete answer for improving the health of the UK’s manufacturing sector?


EDITOR’S


NOTE UK Business Secretary, Vince Cable, announced in March that Reshore UK is now operational. UK Trade and Investment (UKTI) is joining forces with the Manufacturing Advisory Service (MAS) and partners in Scotland, Wales and Northern Ireland for this new one-stop-shop service to help companies bring production back to the UK. Reshore UK provides


a matching and location service, access to advice and support, with a named individual to help each company. It is already generating interest from businesses across the UK and beyond. For more information see www.mymas.org/manufacturing -support/reshore-uk


YOU WON’T FIND the word ‘reshoring’ in your dictionary as it is a fairly recent addition to the English language. For the uninitiated, it refers to manufacturing that is coming back to the UK. Several UK companies have been keen to regain control over their supply chains from low-cost countries, such as China, and help to rebuild the UK as a manufacturing centre, based on quality and reliable delivery times. Chinese wages have increased considerably in recent


years and this is another reason for the increase in reshoring. Between 2006 and 2010, the average minimum wage in China grew by 12.5 per cent a year. In addition, the exchange rate has worsened against the pound, which has resulted in a double whammy. Several companies have admitted that this was the biggest factor in their firm’s decision to move some production back to the UK. Reshoring is to be welcomed, not only because it means


more jobs for UK workers, but also because it helps to reduce valuable foreign currency leaving the country to pay for imported goods.


A complete solution? Is ‘reshoring’ the complete answer for improving the health of the UK’s manufacturing sector? I think not. By far the best medicine for improving the UK’s industrial health would be to manufacture and exportmore. Our company experienced an explosion in exports in 2012 with sales outside the UK totalling over 43 per cent of turnover. Last year, this fell back to amodest 24 per cent, due to a reduction in plant and equipment sales. Nevertheless, if every company could manage to export around 20 per cent of total sales, the picture for manufacturing and the UK in general would look considerably brighter. However, in our case,


forecasting export sales is far more complex than forecasting


home sales. 12 With the exception of the Republic of Ireland, we have


never engaged any agents or representatives abroad. This may, however, be the quickest and most efficient way to introduce your products and services.We went down this route in Poland, but pulled out because the agents wanted payment without results. Companies which are strong on innovation and employ advanced manufacturing technologies have the best chances of exporting, but this doesn’t rule out other companies that have solid products and services to sell. The UK Government is very keen to see export figures


growing, but it can assist manufacturing by giving sustained stability. An economy derived seemingly on the back of yet another boom, fuelled by house prices, borrowing and domestic consumption, is like a house built on sand. What the country needs is a solid manufacturing base, with lower energy costs, less red tape and more investment incentives from a government whose take from companies and individuals in tax is still too great. Give manufacturing the same amount that bankers were bailed out with and see us fly! Another concern to those of us in manufacturing is access


to the right workforce, finding employees with the right skills who also, crucially, want to work in engineering and manufacturing. Although there are now financial incentives to encourage companies to take on apprentices, it will take some years before the apprentices will have gained the skills required by manufacturing. But at least it’s a start… ■


How did we get into the export business? Over twenty-five


years ago, I joined a mission team and visited potential customers over a period of three years.We visited India, South Africa, Australia and New Zealand over this period and only the South African visit resulted in some modest business. Closer to home, we have been more successful in the export of chemicals, with the bulk of clients using our products in their own production facilities.


INDUSTRY INSIGHT


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