Manufacturing’s China challenge to continue: report
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UK manufacturing's main competitive challenges will continue to come from low cost economies. Even though growth in territories like China and India stalled in 2008, their economies are experiencing a much faster return to growth than those of Europe and North America, says a newly released report from the manufacturers' organisation EEF and business advisory firm BDO.
In the latest of its Manufacturing Advantage reports, EEF says that over the last decade UK manufacturers have drawn on production and sourcing opportunities in Eastern Europe and Asia but their manufacturing activities nevertheless remain rooted at home.
Encouragingly, the rep[ort suggests that UK-owned companies keep production and innovation close together and many foreign investors have located some of their research functions in Britain alongside production and assembly.
"The UK's business environment – including the skills base, sophisticated supply networks and infrastructure – supports the factors on which companies based here will compete over the next five years," the report says.
The survey also shows that for some companies, offshoring production to low labour cost economies has undermined rather than supported such efforts and some activities have trickled back to the UK in recent years. Higher than expected costs and quality issues were the main reasons behind such repatriation of work.
However, EEF says many more companies have achieved cost savings abroad and have used overseas facilities to tap into fast-growing market opportunities and the move of some manufacturing functions eastwards is set to continue over the next few years.
