WMG Professor Janet Godsell: More and more companies are realising that overseas production is not as cost effective as it used to be

Professor Janet Godsell

COVENTRY, 27-Sep-2017 — /EuropaWire/ — A new report launched today by researchers at WMG at the University of Warwick, and Reshoring UK, finds that UK companies that consider both direct and indirect reshoring of manufacturing gain best performance boosts and urges companies to consider both approaches when developing their future strategies.

The report will be launched at WMG Supply Chain Research Group event entitled “Realities of Reshoring: A UK Perspective held tonight, Tuesday 26 September 2017, in the International Institute for Product and Service Innovation (IIPSI), WMG, at the University of Warwick.

 

Useful definitions

  • Offshoring: A firm’s decision to relocate production capacityfrom its home country to an overseas destination
  • Nearshoring: A relocation of offshore production capacity to a country geographically closer to the firm’s home country
  • Direct reshoring: A relocation of offshore production capacity back to the home country
  • Indirect reshoring: A firm’s explicit strategic decision to increase capacity at home instead of abroad

Professor Janet Godsell WMG Professor of Operations and Supply Chain Strategy said:

“More and more companies are realising that overseas production is not as cost effective as it used to be. With factors such as increasing supply chain costs and workers’ wages, overseas operations are no longer the most efficient way to operate. This has led to the business practice of reintroducing domestic manufacturing, known as reshoring, becoming more common in recent years.”

“Our report finds that the business performance of indirectly reshored companies is better than companies who offshored, only directly reshored, or made no shoring decisions. Companies that have indirectly reshored have better manufacturing performance than companies who offshored, only directly reshored, or made no shoring decisions.”

The Global Economic Crisis (GEC) in 2008 forced companies to re-evaluate their manufacturing location decisions and was perceived to have accelerated the trend towards reshoring manufacturing back to the UK. This report presents the results of a survey of 262 UK manufacturing companies, conducted at the end of 2016, to understand the different types of shoring decisions they have taken since 2008.

70% of companies have undertaken some form of shoring activity since 2008. 40% of companies offshored, with only 13% of companies directly reshoring (i.e. relocated offshored production capacity back to the UK). However 52% had indirectly reshored, explicitly making a strategic decision to increase capacity at home instead of abroad. Over the last 9 years there were 594 incidences of indirect reshoring, and 127 incidences of direct reshoring. There are more shoring incidences than number of companies, as companies can make multiple shoring decisions. Looking forward, this trend reverses with 70% of respondents likely to consider direct reshoring whilst only 20% would consider indirect reshoring.

Baroness Burt, Patron of Reshoring UK said:

“The report by WMG, and the development of the Reshoring initiative, is to encourage engagement with our manufacturing supply chain and to recognise the strength, skills and innovation available to manufacturers in the UK.”

Note for Editors: Reshoring UK is the unique collaboration of leading industrial engineering associations and Manufacturing Catapults, led by the GTMA, to support both UK and inward investment companies to find trusted accredited suppliers. With support and funding by Innovate UK, a web-enabled Manufacturing Tier 3 Resource Database and Search Tool has been developed for the Reshoring UK website,www.reshoringuk.co.uk

For further information please contact:

Professor Jan Godsell, Professor of Operations and Supply Chain Strategy
WMG, University of Warwick, Coventry, CV4 7AL
Tel: 02476 573482
Email:J.Godsell@warwick.ac.uk>
SCRG: http://www2.warwick.ac.uk/fac/sci/wmg/research/supply_chain/
SCIP: http://www2.warwick.ac.uk/fac/sci/wmg/research/scip/

Or

Lisa Barwick – Head of Marketing & Communications, WMG
Tel: 024 7652 4721 or 07824 540845
Email: L.Barwick@warwick.ac.uk

Or

Peter Dunn, Director of Press and Media Relations
University of Warwick,
Tel UK 024 76523708 office 07767 655860 mobile
Tel from overseas: +44 (0)24 76523708 office +44 (0)7767 655860 mobile/cell
Email p.j.dunn@warwick.ac.uk

SOURCE: University of Warwick

 

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