LONDON — A report into the UK manufacturing sector by the EEF and accountants BDO, has found that one in seven companies surveyed had moved production back to the UK from abroad in the past two years.
British manufacturers have outsourced production to countries with lower labour costs, in Eastern Europe or Asia, in the past decade but higher freight, energy and commodity costs have increased the expense of production overseas, while the recession has put pressure on companies to re-evaluate decisions on location.
The quality of goods and that the speed of getting products to market are also factors that have prompted the return of manufacturing to the UK. The survey also found that 14 percent of companies have moved production back to the UK because cost savings have not been as great as expected.
Two thirds of the 300 businesses surveyed for the report — which include makers of mechanical equipment, plastics manufacturers, food manufacturers and suppliers to the automotive industry — plan to re-evaluate their supply-chain strategies as a result of the global recession.
Three in five companies have expressed significant or moderate concerns about the health of their overseas suppliers, with insolvencies among overseas suppliers posing a significant threat of disruption to the supply chain.
The weaker pound has also helped to make production in the UK more cost effective because the cost of imports has risen.