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Onshoring: Is the tide turning in manufacturing?

Jerome Bull | 19 March 2021

For decades now there has been a trend towards offshoring supply chains as companies have sought competitive advantage through low-cost country sourcing. Whilst this has brought benefits in terms of product costs and operating expenses, many UK businesses have begun reconsidering their attitude towards local manufacturing/sourcing strategies in the wake of COVID, Brexit and other more enduring considerations. 

Here’s a look at some of the factors that are behind this change:

Rising costs

In line with their economic development and GDP, many of the world’s biggest manufacturing hubs are no longer able to offer the competitive edge they once had. Rising costs in labour combined with higher freight charges and tariff threats have contributed towards this change and have led many to consider if keeping the supply chain closer to home is more economical than they thought.

Supply chain disruptions

The perfect supply chain is one with utter predictability. Over recent years, geopolitical concerns such as Brexit and the US / China trade war are shining a light on risk associated with international trade. These concerns were then accelerated and proven to be valid when the pandemic hit. Whilst the challenges presented by COVID have largely been overcome, the industry is more alert than ever to the uncertainty offshore supply chains bring.

Border issues

At a more granular level, one of the biggest difficulties manufacturers have faced in the wake of Brexit is delays at customs. Whilst we know this may prove a short-term issue, the impact of the new customs checks has been challenging for many businesses – especially those who use mixed/shared containers.

Sustainability

A new generation of conscious end-customers is here. Sustainability is at the top of the agenda and consumers are now looking to shop with brands who can prove their ethics are aligned with their own. With carbon foot-printing leading this conversation, global supply chains’ futures are beginning to look uncertain.

New-found confidence in manufacturing resilience

One of the most comforting things to come from these challenges is the resilience manufacturing as a sector has demonstrated. As one of the hardest-hit industries of the recent pandemic and the trade issues brought about by Brexit, businesses who have weathered the storm have perhaps been surprised by how well they have adapted to change. New onshore relationships are blossoming as more businesses have turned to neighbours for support, whilst close proximity between suppliers and distributors can lead to leaner supply chains and shorter lead times.

Ultimately, UK product suppliers need to consider how they are going to future-proof their business. Onshoring can provide a fast, agile and increasingly cost-efficient option to creating a sustainable supply chain. With opportunities for job creation and a much-needed boost to the economy, are we about to see a manufacturing boomerang?

 

Jerome Bull leads the Executive Search team at NSCG and is an active member of the manufacturing & engineering sector team. If you would like to discuss how our talent solutions could support your organisation through change, please get in touch.