Firms move production back to UK

[pampango]

Source: BBC

Manufacturers are moving production back to the UK amid concerns about poor quality and higher freight costs, a report has said. One in seven companies has moved its manufacturing operations to the UK from abroad in the past two years, a report by the EEF and accountants BDO said.

The EEF represents thousands of manufacturing companies in the UK.

"Many companies have taken advantage of the low-cost emerging markets, both as market opportunities and also as a means of reducing costs," the EEF's chief economist Lee Hopley told the BBC. "If you look at how UK manufacturers compete in global markets, it's about quality, it's about customer service and it's about delivery times.

"If lower labour cost producers can't provide what they need when they need it, then the alternative is to produce in-house and bring production back to the UK, which some are clearly doing."

Read more: http://news.bbc.co.uk/2/hi/business/8434458.stm

[enid602]

1. China

China´s cost advantage depends largely on cheap fuel. As the price of fuel goes up, they are forced to cut corners and substitute raw materials in an attempt to keep their cost advantage. If fuel costs stay high for the long term, many countries will find it cost effective to manufacture at home. This is a huge challenge for China, who will no doubt continue to try to stimulate their local market to make up for lost overseas markets.

[KurtNYC]

4. I must disagree. All countries face basically the same fuel costs

so even with fuel prices up, China retains an advantage in labor costs.

Tariffs, VAT and other taxes do/would change the equation in favor of domestic production. Friends of mine have started assembling products in the USA. US labor and overhead costs more than Chinese labor plus shipping but it is not that much more and it is the right thing to do. It also gets you a break if you export to Canada bc Canada puts a high tax on goods made in China, versus nothing on NAFTA qualified imports.

[ieoeja]

9. The point was that it takes a lot more fuel to ship a product to Chicago from China.

Than it does to Chicago from Detroit.

So in that sense, higher fuel costs work against Chinese exports (and the poster to whom you replied did say China would push to expand their domestic market to make up for the loss of overseas sales).

[Ghost Dog]

18. What's it like exporting manufactured goods from the US to the EU?

Shipping costs are less that to-from Asia, I guess.

Documentation, export taxes. Any import tax and VAT will be charged to the importer, unless you're in a VAT-free zone such as the Canary Islands or Madeira, I guess.

All European regions will be concentrating on boosting locally manufactured, packaged and recycled production for socio-economic reasons which can also turn out to supportive of ecological reasons for re-designing economies globally (making them, wherever feasible, more local), and which could very readily be encouraged by means of environmental taxes on eg. unnecessary carbon-burning transportation and other contamination and pollution.

With regions in the Americas, Asia and Africa also doing this, there can be plenty of productive local economic activity in all regions globally while there will still be room for plenty of products to be best produced in just one or a few regions and exported to the rest.

[enid602]

22. high fuel

All I´m saying is that when fuel costs go up, it becomes more advantageous for a Los Angeles factory to purchase components from Los Angeles rather than China.

[Big_Mike]

15. We have our boards made in China

and are being destroyed by poor or non-existent quality control. So when the assembled board gets to us after being made in China and surface mounted parts assembled in Mexico, we get crap that constantly fails. Our European owners don't care, they just want the profits. We lose all of the shipping time back to China for replacement parts, then lose the time for the parts to be assembled in Mexico in the hope that the board will work correctly this time. Yeah, right!

Additionally, we send out engineering work to India. Huge mistake. They do not perform complex engineering tasks well there.

To correct these international mistakes, we have been "on-shoring" our fixes. Hopefully, the businesses we formerly had build our boards will still be here when we come back to our senses.

[WriteDown]

17. I have a friend who's a project manager for GE...

He has a saying about outsourcing. Pay twice to get it right.

[ikri]

21. I worked on a project a few years ago

The company I worked for hired an Indian call centre to call newly set up companies in the UK to find out information that wasn't listed yet (directors, business address, etc.). The quality of the information that they returned to us was woeful, half the time the names & addresses they'd come back with were clearly gibberish and anyone with a basic understanding of English language and culture would have immediately realised that.

We ended up spending enough time on cleaning up the crap data that we ended up hiring people to fix what the Indian company had fucked up. For what we paid for the Indian call centre to do the job and for the clean up we probably paid the same if not more than if we'd just hired a few people locally to do the job in the first place.

The management just didn't get it though & ended up going back to the Indian call centre for another project a few months later, small wonder the company ended up going to the wall.

[Demeter]

2. And The Great Collapse of "Globalism" Continues

and not too early, either.

Globalism is the international corporate scam to rob Peter, Paul and Mary of their wealth, inheritances, and cultures all to profit a few "Masters of the Universe", the "Smartest Guys in the Room", and other such braggadocio.

But they cannot pull it off without (1) oil, (2) war, (3) the complicity of those who are supposed to defend their nations and their peoples from such piracy.

[daggahead]

11. Let's no forget Wall Street.

Without investors demanding 5-10& growth every quarter, the pace of globalization would certainly have slowed.

[fasttense]

3. Isn't that special.

How nice of them to move some of the jobs back to the markets they sell in. So good of them to consider us workers that buy their crap. So glad they threw us a bone.

What right does any corporation have to sell their crap to us, the UK or anyone? If they don't provide jobs, if they pollute, if they funnel all their wealth out of the country and hide from taxes, then they should not be able to sell their crap in our country or the UK or anywhere.

Corporations are NOT people and have NO Right to sell crap to us, unless they offer other benefits to our society.

[Johnny Harpo]

5. What we need is more firms moving jobs back to the US

n/t

[conspirator]

6. I am in UK and I will tell you why: we are the new poor people

The middle class is gone. Salaries being payed in UK at the moment are ridiculous. The minimum salary is less than £6.
We are close to be the new Iceland. So it's alright for corporations to come and take advantage of the desperate times.
It's not that good news at all.

[BumRushDaShow]

10. The sad thing about what you wrote

is that UK £6 = ~US $9.51 hr, whereas the current (2009) U.S. FLSA minimum wage stands at US $7.25/hr (with a couple states still holding out lower), which is ~UK £4.57. That is due to rise to US $8.25/hr in July 2010 (~UK £5.20). So many would love to get anywhere near $9/hr.

The only way these increases were able to go into effect was because they were added to an Iraq War funding bill a couple years ago. :banghead:

[conspirator]

13. Don't forget about UK's high rent and food prices.

Plus the energy bill for the harsh winters.
We are talking £800 per month rent plus bills on top of that, if you want to have your own tiny flat.
We are broke.

[Lydia Leftcoast]

19. You're talking exchange rates. In *purchasing power* the dollar and the pound

are pretty close. For example, walking around a town at noon, you see pubs advertising lunch specials for £6.95, which is $11.12 at the current exchange rate, but as you can see, the minimum wage doesn't even buy a discounted lunch.

By and large, prices in pounds are close to what they would be in dollars here.

[WriteDown]

20. But the price to live in the UK is out of this world....

Would be like making 9$/hr in Manhattan.

[DavidDvorkin]

7. Firms move production back to UK

Source: BBC

Manufacturers are moving production back to the UK amid concerns about poor quality and higher freight costs, a report has said.

One in seven companies has moved its manufacturing operations to the UK from abroad in the past two years, a report by the EEF and accountants BDO said.

The EEF said the UK had become "increasingly competitive and efficient" over the past few years.

The EEF represents thousands of manufacturing companies in the UK.

Read more: http://news.bbc.co.uk/2/hi/business/8434458.stm

---

Interesting. Wave of the future for the UK and other older industrialized countries, or just a brief reprieve?

[enlightenment]

8. I don't know - but is it possible that the government is

cracking down on companies that rely on out-sourcing? Perhaps making it a little more difficult for them to operate - raising taxes, increasing regulations on imports, actually applying rules that are already on the books . . . stuff like that?

It seems like the UK has taken a more aggressive approach to dealing with the problems that it - like the US - allowed to get out of control in the last 30 years. Like us, they bailed out failing banks in the wake of the financial melt-down, but they actually took control of those banks and broke them up. They are planning on taxing the bejesus out of high bonuses and stepping up regulatory controls as well (how well they will complete those goals is debatable, but at least they're talking about it).

Not perfect by any means, but they seem to be making an effort to pull themselves out of the mess they're in rather than just throwing taxpayer money at it, sticking their fingers in their ears, and trying to convince the populace that prosperity is right around the corner.

[theophilus]

12. Peak Oil, eventually, will be our friend. n/t

[Demeter]

14. Peace in Our Time No Oil=No Modern Warfare

[BootinUp]

16. I believe over the next couple of decades

we will see a similar trend in the US, hope so anyways.

[Romulox]

23. Surely the OP considers this bad news! Those Brits are stealing jobs

that could be done by "more deserving" workers in the developing world. Uh...right?