sAs the government admitted last week that there are ‘significant challenges’ to UK stock levels because of Brexit and Covid, is reshoring then perhaps the answer?
Last week’s government report, from the Office for National Statistics (ONS), revealed the full extent of tumbling stock levels and broken global supply chains in the wake of Brexit and the Covid pandemic.
‘Stock and Supply Chain issues in the UK’ looks at the impact of Brexit, Covid, the blockage of the Suez Canal and other problems.
The report states that that “over recent years, the EU exit, coronavirus (COVID-19) pandemic, higher energy and commodity prices, and events such as the blockage of the Suez Canal have presented businesses with significant challenges when acquiring and maintaining their stock.”
The ONS said that: “As a result of these challenges, the UK has experienced increased business uncertainty, supply chain issues across a variety of materials and products arising from worldwide shortages, and rising inflation.”
Following these findings, some industry leaders say ‘reshoring’ – bringing manufacturing back to the UK – will help avoid the impact of stretched global supply chains finally snapping.
The report reveals the full extent of manufacturing and retail problems, argued David Jinks, head of consumer research at international delivery firm ParcelHero.
Jinks told City A.M. that manufacturers, retailers and their delivery and logistics partners will need to plan for a growth in reshoring (returning manufacturing back to the UK) as global supply chains break apart.
“The ONS report has laid bare the problems manufacturers and retailers had in maintaining stock levels during Brexit and the pandemic and reveals that they are continuing to experience difficulties,” he said.
“The report surely undermines the extraordinary claim by Jacob Rees-Mogg that Brexit is ‘already a success’.”David Jinks
Jinks continued: “The report surely undermines the extraordinary claim by Jacob Rees-Mogg, Brexit Opportunities Minister, that Brexit is ‘already a success’, has been ‘extremely beneficial for the country’ and that ‘the evidence that Brexit has caused trade drops is few and far between’.”
Made in Britain
Today, many iconic British brands are no longer made in the UK.
For example, MG cars are now built in China and Raleigh cycles and Morphy Richards irons in the Far East.
Even Brexit-supporting James Dyson now makes his vacuums in Malaysia and moved his head office to Singapore in 2019.
“It’s hard to believe, but even the British staple HP sauce, named after the Houses of Parliament, moved production to Holland,” Jinks pointed out.
Despite all these supply chain problems, Britain is still the ninth largest manufacturing country in the world, producing £183bn of products and employing 2.5m people.
“That is a good base to build on. Britain’s logistics and delivery companies will soon need to adapt to a growing UK manufacturing base. The War in Ukraine can only accelerate this,” Jinks said.
In fact, UK manufacturing might be on the verge of a renaissance in response to these challenges, he stressed.
For example, the manufacturing company Albert Jagger Engineering has begun reshoring its Antiluce fastener range back to the UK from China.
It will see the business returning to its facility in Bloxwich for the first time since the early 2000s. The company says it is returning its manufacturing process back into the UK “in order to improve control over every stage of the production line,” Jinks said.
Ted Baker and Boohoo
The ‘fast fashion’ industry also responded swiftly.
Ted Baker has introduced its Made in Britain range and, this year, Boohoo has learned from its previous supply chain woes and opened its own 23,000 sq ft factory in Leicester.
Returning manufacturing to the UK has significant advantages including reducing products’ carbon footprint, reducing lead times and delivery costs end ensuring quality by continued monitoring rather than relying on samples.
Morever, the trade body Made UK said recently that manufacturing is returning to Britain from across the world.
40 per cent of reshoring is returning from China, over 30 per cent from Eastern Europe and almost 20 per cent is returning from India.
“It believes we are on the cusp of a fourth industrial revolution that could result in reduced labour content. This would mean the reshoring of low value items to the UK,” Jinks said.
Not out of the woods
Despite the encouraging signs, the ONS findings do reveal British businesses are not out of the woods.
In compiling its report, it received comments from businesses across a variety of sectors, including manufacturing, construction and retail.
In particular, companies complained that they had built up stocks for the first Brexit date, 29 March, 2019, that was then abandoned.
“The uptick in comments mentioning supply chain issues over the last three quarters indicates that businesses are continuing to struggle,” the report reads.
“The comments also show that this is a result of the current economic conditions, the UK’s exit from the EU customs union and single market, and other issues such as the coronavirus (COVID-19) pandemic and general supply chain issues,” the ONS added.
“This might see a product carrying a British badge being assembled in the Far East using Chinese microchips, Japanese casing components and Russian palladium,” Jinks commented.
“With all this in mind, it’s little wonder that the long-established global supply chain model is crumbling,” he concluded.