The global manufacturing landscape has changed dramatically in recent years as Covid-19 and geo-political issues have caused huge disruption to supply chains. As a result, there is a growing trend for reshoring manufacturing among UK companies, including contract electronics manufacturing.
Offshoring was once a baseline strategy for UK manufacturers, attracted by cheap labour and material costs, in particular in eastern Europe and Asia. However, recent world events have caused a major re-think, with growing support for bringing more and more manufacturing back home.
Global component shortages and why reshoring makes sense
One of the primary reasons behind this trend and the creation of associations such as Reshoring UK (of which MPE Electronics is a member) is the global shortages in critical parts and products that have been caused by the pandemic, as well as the war in Ukraine and rising tensions between the US and China.
An acute shortage in electronic components is one example of the impact of these factors. The disruption to this engineering supply line has had far-reaching consequences and affected the availability of products, causing a spike in costs and pricing across the industry spectrum.
Reshoring is an answer to this problem. By returning component and product manufacturing to the UK, manufacturers are reducing their reliance on offshore production partners and their exposure to the risks that this strategy currently presents. This is making UK manufacturers and industries more resilient going forward.
How pricing and quality issues have affected offshoring
Protection against global engineering supply chain disruption is a big benefit of reshoring, but it’s not the only one.
While offshoring once offered lower costs, component and product quality was a consistent issue for many and one that has become more pronounced over time as expectations of quality have grown and international standard frameworks have become more stringent. The high standards of UK manufacturing offer reassurance in terms of output quality.
Returning to costs, it should also be pointed out that as the offshoring manufacturing market has matured, including in relation to worker-related legislation and quality frameworks, the difference in pricing has shrunk significantly. The impact of Covid-19 and geo-political tensions only closed the gap further.
Reshoring manufacturing and its flexibility benefits
Another key benefit of reshoring is the improved flexibility that domestic supply chains can offer. Offshoring involves minimum order quantities and these thresholds aren’t always easy or sensible for manufacturers to meet. Working with local suppliers carries fewer restrictions.
This benefit also extends to delivery times. Transporting goods from one side of the world to the other takes time and, at present, this comes with a fast-rising price tag and the prospect of delays. Working with a domestic supplier offers greater assurance and a faster turnaround.
How reshoring offers stronger relationships and security
On another level, it is easier to build a close relationship with a domestic manufacturing partner. This bond could prove critical when unscheduled ordering is required, such as a request for additional stock, and when deliveries are needed at short notice.
Also, sourcing parts and components from domestic manufacturers offers greater security in terms of intellectual property, which is an area again making the headlines, in particular in relation to the telecoms and mining industries.
What reshoring can mean for UK manufacturing
While the redrawing of the global manufacturing landscape has brought some uncertainty, it also offers opportunities, including for the UK manufacturing sector and its engineering supply chain.
Reshoring is a solution that has the potential to stabilise the supply chain and, with it, product availability and pricing, while at the same time helping to drive a much-needed period of dynamism and growth in the UK manufacturing industry.
To find out how MPE Electronics’ PCB manufacturing and assembly services can benefit your business, contact us on +44 (0)1825 764822 or enquiries@mpe-electronics.co.uk.
