Reshoring: Bringing Jobs Back Home

Imy Clarke - On behalf of Alchemy Recruitment, April 2, 2014

After years of nationwide complaints that businesses were reducing employment opportunities by sending jobs offshore, British companies are coming home. The UK is reshoring.

Since 2011, over 1,500 manufacturing jobs, which had been moved to Europe and Asia, have been brought back to the UK. These jobs are in everything from textiles to software production, with most notably model train manufacturer Hornby and food manufacturer Symingtons reshoring from India and China respectively. According to a study of almost 300 businesses by the EEF manufacturers’ organisation, one in six British companies has reshored in the past three years. Price Waterhouse Coopers have also estimated that the trend to reshore jobs could create 200,000 new jobs in the next decade as well as provide a boost between £6 and £12 billion to GDP by the mid-2020s.

So why are these companies suddenly coming back? The EEF study found that the main reason was improving the quality of products, with factors such as certainty and speed of delivery, cutting transport costs, reducing supply chain disruption and rising costs in emerging markets were all major deciders. As is to be expected, with the economic growth of markets in India and China, wages are rising. As a result many British companies are no longer seeing as much financial benefit as before and are bringing the work home. Yet, manufacturing costs per hour in Western Europe are still fifteen times higher than in Asia or Eastern Europe.

The government has spotted the reshoring trend and David Cameron is determined to make Britain “the re-shore nation”, even though we are currently trailing behind the 80,000 reshored jobs in the US due to reduction in US energy costs driven by the boom in shale gas. Yet, the government is making an effort to entice British companies home by offering a £100m fund. The EEF has encouraged the government to keep this reshoring momentum going by keeping UK energy costs at, or below, the EU average and reforming its skills and apprenticeship structure. One of the main barriers for manufacturing in the UK is a lack of skilled workers.

So is the government doing enough to encourage Britain to grow into the manufacturing giant is once was, or is there more it can do? While it may create more skills and apprenticeship schemes, will the people of Britain go for them?

Posted in categories: Domestic
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