A bit of push required
1 min read
We await the coalition government's new manufacturing framework – it won't be called a strategy – with interest. It is expected this autumn and follows talk of rebalancing the economy, both during and after the election. The Budget was, however, criticised by the EEF for failing to demonstrate talk becoming reality, although the government did imply that there would be more to follow, at least as regards the rate of corporation tax (see Machinery comment, July 2010).
The previous government had a Manufacturing Strategy ( relaunched in September 2008) and latterly launched its Low Carbon Industrial Strategy in March 2009, of course.
But one of the issues that UK manufacturing has faced in recent years, during the existence of said strategy, is the outsourcing of work to lower cost countries, notably China. Latterly, anecdotal evidence has instanced some companies pulling back from that approach and returning work to the UK, while a report by the EEF and BDO Stoy Hayward, published earlier this year, revealed that one in seven British companies had repatriated manufacturing operations to the UK in the past two years.
This is the result of 'pull' by the outsourcing companies themselves, rather than any concerted 'push' by any organisation or movement. The outsourcers have learnt that it didn't pan out as well as they thought it might, while the 'China cost' is also increasing.
In the US, where the Obama administration came to power promising to rebuild that country's manufacturing base, there's an interesting independent initiative that saw its profile raised at the recent IMTS exhibition in Chicago (see page 23) and which provides a matching 'push' to OEMs' 'pull'.
Called the 'Reshoring Manufacturing Initiative' (www.reshorenow.org), it is led by Harry Moser, chairman Emeritus of AgieCharmilles in the US. The initiative is a "non-protectionist, efficient way to reduce our imports, increase 'net exports' and regain manufacturing jobs". (You can see Harry Moser talk about it here or listen here.
The initiative cites an Archstone Consulting survey of 2009, which showed that 60 per cent of manufacturers use "rudimentary total cost models" and ignore 20 per cent of the cost of offshoring. To help identify all costs, TCO Estimator software is offered free at the initiative's website, allowing OEMs to compare the true TCO of local versus offshore sourcing and to help subcontractors sell the benefits of local sourcing to their customers. This tool is generic, so works for UK firms, too – just change the currency.
A similar bit of 'push' in the UK would be good, while we wait for some helpful government policy. Any takers?
First published in Machinery, October 2010
