Since the late 1970s, manufacturing production was commonly offshored from developed nations to countries including China and India. At the time, these cost-saving decisions proved controversial and tough on the UK work force, with Burberry moving 300 jobs to China from their Rotherham factory despite their ‘Made in Britain’ ethos.
This movement was seen all over the UK due to it’s immense economic benefits. Moving work to low-cost countries has created many jobs and raised the standard of living, whilst companies have found higher profits and consumers are able to enjoy goods at much lower prices.
This move was not beneficial to all however, with huge losses of jobs in developed countries leading to 86% of American’s polling that they believed offshoring jobs were the main cause for their country’s economic problems.
However in recent years, we have seen a significant reverse in offshoring with a return of manufacturing jobs to the West.
This ‘reshoring’ of jobs back to the countries of origin appear to be due to rising wages and costs in countries such as China, where wages have been increasing 10-20% a year for the past decade. This was felt by Coventry-based automotive component supplier, with chairman David Keene commenting;
“We went there because it was going to be cheap, but cheap has turned into ever-increasing prices because wages and other costs are rising rapidly… The automotive companies are getting faster and faster in their cycle of delivering products. There is also a lot of personalisation going on. If you have got a supply chain that takes months to bring stuff in, you can’t be flexible.”
With shipping costs doubling over the past 18 months and a steady increase in wages, it is no surprise that there has been an 11% increase of manufacturers moving back to the UK. These impacts have been felt by large UK retailer John Lewis, who now aims to increase the sales of UK made jobs by 15% in the next two years.
Whilst countries like Vietnam, Indonesia and The Philippines still offer low wages, they lack China’s efficiency, scale and supply chains hence the rush to return back home.
Safiya Bashir on 16/02/2016