Manufacturing reshoring and its limits: the UK automotive case

Abstract

This paper explores the meaning of reshoring and its drivers in the case of UK manufacturing and in particular its automotive sector. Drawing on interviews, policy reviews and a range of recent surveys, the paper finds that while reshoring is a discernable trend in UK manufacturing, it is less pronounced than many have claimed and that-in the UK case at least-there are severe limits as to how far this reshoring trend can go, particularly in relation to the availability of skills and finance in the supply chain. This in turn raises questions over the stance of British policy and whether more could be done, with comparisons made to US experience.

Reshoring: a strategic renewal of luxury clothing supply chains

“…Largely, firms considering the impact of offshoring and outsourcing production on total costs, profitability, and customer value creation drive the reshoring phenomenon (Ellram et al 2013). From this total cost perspective, the shrinking labour cost differentiation between offshore countries and Western economies, high transportation and logistics costs, and the higher than expected costs associated with coordination and quality control over supply chain partners in foreign locations, have led some firms to return production to their home countries (Bailey and De Propris 2014;Fratocchi et al 2014;Macchion et al 2015). The psychic distance (e.g.…”

“…Firms are beginning to look at their manufacturing location decisions and consider their implication on customer value creation, market position and competitive advantage (Bruce and Daly 2011;Caniato et al 2011;Ellram et al 2013). However, a valuedriven enquiry into the renewal of supply chain strategy through reshoring has received relatively little attention in empirical studies, as most previous research has focused on understanding the business drivers and the scale of reshoring (Bailey and De Propris 2014;Fratocchi et al 2014). Too much emphasis has been placed on such issues as cost, risk, and control along supply chains.…”

Reshoring: Myth or Reality?

“…Innovation related factors like the loss of know-how and qualified personnel seem to be less important in the backshoring activities by EU companies; labour costs are also found to play only a minor role (Figure 3). Evidence on backshoring to the United Kingdom is available from a variety of surveys, as discussed by Bailey and De Propris (2014). A first survey by Business Birmingham in 2013 indicated that one-third of manufacturers expected to source more domestically over the coming years.…”

“…UK research has suggested that with rising productivity in manufacturing, reshored jobs were not in large numbers and were more likely to be highly skilled, technical and well paid (Bailey and De Propris, 2014). Reshored activities will not necessarily create a large number of jobs for lower skilled people as production will become more automated, digital, intelligent and technology intensive.…”

The UK’s Emissions and Employment Footprints: Exploring the Trade-Offs

“…Arguably, such a move could equally drive a rise in production emissions, although this might not necessarily be the case if low-carbon or renewable-energy technologies are in place. Nonetheless, the actual possibilities of achieving this reshoring are uncertain and some studies have suggested that there are limits as to how far it can occur, at least in some sectors, mainly due to the availability of required skills and finance along the supply chain [13]. A more realistic view, at least in the near-to-medium term, is that the UK will continue to depend heavily on imports, while focusing more on high-value activities and services.…”