Lord Alec Broers presented the day: Bosch have the capability to design and manufacture all of their products in Germany. When design moves manufacturing often moves too. He made an interesting point was made in regards to the effect of localised web based direct distribution putting up the cost for consumers.
John Cridland (CBI) presented his view of the key variables being: people materials and ideas. Of 53 CEOs the CBI interviewed 20/53 were reshoring back to the UK. Supply Chain risks have been moved to unknown areas. Act Local Think Global. £1bn of automotive manufacturing was reshored in 2012. 90% of JLR R&D based in the UK. Materials costs are critical to location of manufacturing with energy costs 50% higher than EU.
The Cranfield research: UK manufacturing is estimated to add 30bn revenue to UK economy in 2025 adding 500k jobs. Cost is not the main customer driver quality, management and supply chain are more important. Innovative environment, short lead time and supply service are key. Same picture across sectors.
The main re shoring drivers are 1. the business eco system, 2. business culture. 3. Customer Location. 4. Labour skill. 5. Resource. 6. Regulation
Wages relative cost are Germany 48, US 36 UK 31. Manufacturing also was considered in the context of improving health. OEMs dont pay for Tuer 2&3 tooling.
Digitization is impacting the role of middle management and communications and integrating services. Aftermarket and R&D start and finish are where most value can be added. Productivity from 2007 – 2013 for the g13 countries improved 5% yet 0% was achieved in the UK.
Labour costs in China have increased 4x since 2000. Decisions on serving local markets are determined by outbound logistics costs. China has a different attitude to capital expenditure.
TP Comments there are some other major shifts to consider:
- the foreign ownership of companies has changed dramatically reducing local control of reshoring
- Balance of wealth and reduction in low end roles will likely to increase cheaper subsidized UK labour for the underemployed
- the toughest market for the product is a good place to base a business and R&D
- manufacturing is a great place to develop skills in house through vocational and apprenticeship schemes to address skills shortages
- markets can be changed through collaboration
- UK solvency will drive many cap ex decisions
- motivation in manufacturing remains the main challenge to attract the best talent
The Manufacturing Catapult HVM scheme has provided an excellent platform to prove new processes and technologies for large and small companies alike through centralization and to leverage government support.