15% of British firms switching production back to UK

Published on Wednesday 30 December 2009 18:02

MANUFACTURERS are switching production back to the UK from overseas, amid concerns over quality and the high cost of freight, a survey has revealed.

The international legal firm Eversheds claimed the survey provided further evidence that the UK's "flexible" employment market meant "it suffers more in a recession but gains more in an upturn".

However, Robin Johnson, an Eversheds partner and its head of manufacturing, warned it was "too early to say whether the UK manufacturing sector is out of the woods yet".

One in seven firms surveyed in a report by manufacturers' trade body EEF and accountancy practice BDO said they had switched back to the UK in the past two years.

They had been initially attracted by cheaper labour in eastern Europe and Asia, but the EEF said 14 per cent had moved production back to the UK because cost savings had fallen short of expectations.

Increased freight, energy and commodity costs had made producing goods overseas more expensive, the survey added.

Other reasons to return to the UK were that goods from abroad fell below quality standards and products were not delivered to market quickly enough.

Nearly 70 per cent of firms agreed the UK was a competitive manufacturing location – a much firmer vote than the 43 per cent two years ago.

The report surveyed 300 businesses, including the makers of mechanical equipment, plastics, food and those supplying goods to the automotive industry. Two-thirds said they planned to re-evaluate their supply chains as a result of the global recession.