The manufacturing of £4.8bn of goods could be moved to the UK as a result of Covid-19 and Brexit, a new report has found.
Research from advisory firm Alvarez & Marsal and research group Retail Economics, reported in the Guardian, says there is evidence that this trend is already occurring in the fashion, retail and food sectors.
‘Reshoring’
The ‘reshoring’ of production lines is being accelerated by the pandemic which has underlined weaknesses in many global supply chains, encouraging companies to try and source closer to home.
The Guardian reports that fashion website ASOS has started making more of its clothing at factories in Leicester, while Ted Baker also announced a ‘Made in Britain’ range earlier this month.
Brexit worries
Concerns over the prospect of a no-deal outcome in the UK’s negotiations for a future trade deal with the EU – which would, for example, lead to 12% tariffs being introduced on clothes – has also driven companies to review their supply chains.
The research highlighted consumer and investor demands for sustainability as another factor.
More responsive supply
Reshoring manufacturing has helped some companies to make their supply chains more productive.
Fashion Enter chief executive Jenny Holloway said business was up by more than a third this year with retailers looking for more responsive supply close to home.
“There is no way I would have opened the factory in Wales unless I was certain there’s a long-term trend in coming back to the UK. It’s exciting,” she said.
Supply chain resilience
An expert panel in The Engineer concluded that Covid-19 and Brexit have “turbocharged” the arguments for reshoring, agreeing that it could bolster manufacturing resilience in the UK and ensure that supply chains become more robust.
Julia Moore, chief executive of manufacturing trade body GTMA and head of online marketplace Reshoring UK, said that outsourcing manufacturing has become a “race to the bottom based on price”.
She said the cost advantage has declined and companies were now considering “the flexibility of local supply, quality issues, lead times, volume demands and easier face-to-face personal contact” to return to UK suppliers.
Diversification
According to Bhavina Bharkada, Make UK’s senior campaigns and skills policy manager, UK manufacturers are also diversifying their supply chains.
She cited a Make UK survey in which 15% of respondents said they are now using multiple suppliers, with the same proportion increasing their use of local suppliers to spread risk.
Over the next two years, more than a third of manufacturers intend to moderately increase their use of UK-based suppliers with a further 12% indicating a significant increase, she also said.
It’s coming home
The Make UK survey is supported by the latest ‘UK Attractiveness Survey’ from EY, reported in Net Times.
This report found that 32% of manufacturers are looking to reshore activity in the UK and another 32% of respondents said they intended to invest in the UK over the next 12 months.