Midlands manufacturers concerned about currency fluctuations post-Brexit hitting the costs of parts they import should consider the pros and cons of reshoring operations, according to Crowe Clark Whitehill’s head of manufacturing.
Johnathan Dudley, Midlands managing partner at the national audit, tax and advisory firm, said: “There has been a growing trend in western nations since the seventies for manufacturing production to be offshored from developed nations to countries such as China and India.
“But in recent years, we have seen a steady return of manufacturing jobs to the UK.
“The reasons for this are many, but among these are rising wages in so-called low-cost countries, and the real problem of flexibility in a supply chain with such a long lead time.”
He pointed out that Midlands manufacturers had learned the lesson of the seventies and eighties and are now more innovative, efficient, and more flexible.
“Second and third tier suppliers on your doorstep means shorter lead times and a greater facility for personalisation of products,” he said.
Shipping costs are said to have doubled in the past two years, and wages in China and Eastern Europe, for example, have increased at 10-20 per cent a year over the last ten years.
Mr Dudley said: “I believe one of the unexpected bonuses of the Brexit vote could be to accelerate the rush to reshore.
“A supply chain that takes months, rather than weeks or even days, to deliver cannot be flexible.
“And now we have currency fluctuations as a major factor on every importers’ radar, the case for reshoring is becoming stronger by the day.”
He said that reshoring operations could help to strengthen the UK economy in the medium to long term.
“There are three benefits – removal from exchange rate fluctuations, new jobs in the UK and an increasing skills base within our industrial suppliers.
“All of which could help to strengthen the UK economy as the benefits filter through,” he said.