Homeward Bound? Seizing Manufacturing Onshoring Opportunities. Part 2
This is the second of three blogs which develops and extends my recent Birmingham Post column on 'onshoring' opportunities in manufacturing which can be found here. The first blog in this series can be found here. Part 3 is on Friday.
As highlighted in earlier blogs, for various reasons the possibility of repatriating certain manufacturing activities - and especially the sourcing of some components back to the UK - does offer potential, particularly in terms of rebuilding some of the UK's fractured supply chains.
The latter has been identified by researchers - such as those at the Centre for Research on Socio-Cultural Change (CRESC) - as a key weakness of the UK's manufacturing base. Froud et al (2011: see here), for example, note that in the UK's largely foreign owned branch assembly plants, broken supply chains effectively undermine high British content and limits domestic backward linkages.
The danger here is that attempting to foster 'rebalancing' and manufacturing revival is superficially attractive but could simply mean more assembly in the UK, with increased spending on components and other intermediate products then leaking abroad. Work by CRESC notes the example of JCB, where the British content of its diggers declined from 96% by value in 1979 to just 36% by 2010.
In other work CRESC has highlighted the case of Bombardier; while arguing for a more sophisticated government procurement policy to support jobs at Bombardier jobs, it also stresses the effects of broken supply chains which limit the upstream national benefits of the firm's activities in the UK (Froud et al, 2011: see here).
Of course, increased international trade coordinated by multinational firms across borders has been a key feature of the 'deeper' form of globalisation witnessed in recent years, and this involves more sourcing of components by manufacturers across borders in general.
But the CRESC research is especially interesting in highlighting that the trend of overseas sourcing from UK based firms has been especially pronounced; in British machinery and vehicles some 50% of intermediate purchases are imported as against just 30% in Germany where the propensity to import is much lower (Froud, 2011).
Similarly, while the recent news of GM's Ellesmere Port being saved from closure after a landmark deal on flexibility and wages was very welcome, at present only 25% of the components going into Astra cars assembled at Ellesmere Port come from the UK. This puts into stark contrast how fractured and weakened local supply chains have become as GM - like other assemblers - shifted sourcing out of the UK.
That needs to change, and there is some hope that it could, with a bit of help. Under GM's latest plans for the plant, costs will reduced by running three shifts a day, increasing output, more flexible working but also by sourcing more parts locally in the UK - a very recent trend given higher transport costs making local sourcing a more competitive option.
In fact, Ellesmere Port was seen as vulnerable to possible closure in part precisely because it currently sources a large proportion of components from mainland Europe and exports assembled cars back to the continent. As well as huge effort by workers and unions to save the plant, government support was also important, and the challenge now is to use that support so as to foster spillovers in terms of wider capacity building in the supply chain.
On the latter, the Coalition government has recently unveiled a £125 million Advanced Manufacturing Supply Chain Initiative (AMSCI) to help develop local suppliers around the UK's major manufacturers (including auto). The fund is aimed at supply chain companies and can be used for capital expenditure, skills and training, and R&D projects. The scheme aims to build on an earlier auto-focused Regional Growth Fund bid by several Local Enterprise Partnerships (LEPs).
While a welcome start, the overall amount of funding on offer, £125 million, is limited, and due to the minimum project threshold value of £2 million, bids often need to be from several companies clustering together. Extending the scheme so that smaller firms can directly access the support available seems critical, especially when the lack of access to finance is a major issue for such firms - more on that later in the week.
Professor David Bailey works at Coventry University Business School
Older/Newer
« Double Dip Deniers take note: this is going badly wrong. There's still time for a Plan B. | A levels not just about the A, it's the STEM »
39 Comments
Leave a comment
Business authors
David Bailey - Prof David Bailey, Coventry University Business School
My postings |
My feed
Stuart Pemble - Construction Lawyer, Mills & Reeve
My postings |
My feed
John Clancy - Birmingham City Councillor and director of mediafuturesalert.com and justliteracy.com
My postings |
My feed
John Samuels - Professor of Business Finance, Birmingham Business School
My postings |
My feed
Chris Tomlinson - Chris Tomlinson is the founder of social media and online PR agency Friend (frienddigital.com)
My postings |
My feed
Andrew Whitehead - Senior partner at law firm SGH Martineau, leading the firm's Energy & Climate Change practice.
My postings |
My feed
Keith Gabriel - A Birmingham-based PR Account Manager
My postings |
My feed
Beverley Nielsen - Lecturer, Design Management, at the Birmingham Institute of Art & Design, BCU
My postings |
My feed
Mike Loftus - Director of News from the Future Ltd. Writing on the trials of setting up your own business
My postings | My feed
Richard Halstead - Midlands region director for EEF, the manufacturers organisation.
My postings | My feed
Karl Edge - partner at KPMG in Birmingham, specialising in automotive, manufacturing and house building sectors.
My postings | My feed
Peter Owen - Managing director for construction firm Willmott Dixon Midlands.
My postings | My feed
Dr Steven McCabe - director of research degrees for Birmingham City Business School.
My postings | My feed
Francis Greene - Professor of Small Business and Entrepreneurship, at the University of Birmingham.
My postings
Alan Gilmour - Director at Cogent Elliott, experienced in marketing, brand development and customer relationship management.
My postings
Paul Noon - Paul Noon, OBE, West Midlands International Trade Director at UK Trade & Investment.
My postings
Latest Birmingham Post News blog
Birmingham Post staff and guest bloggers from the midlands give you their opinions on local and national news.
Latest Birmingham Post Lifestyle blog
Birmingham Post staff and guest bloggers from the midlands give you the lowdown on what's happening in your region and some musings on culture in the UK and beyond.
Latest Birmingham Post Science blog
Birmingham Post staff and guest bloggers from Birmingham and the midlands inform and entertain on all science matters.
Latest Birmingham Post Sport blog
Birmingham Post staff and guest bloggers from Birmingham and the midlands inform and entertain on all sporting matters.
Firstly, I'm sure firms will always procure locally if it is financially viable for them to do so. Private firms are (should be!!!) only concerned about profit, as it is profit that will allow them to survive and grow. This is a simple business fact.
Secondly, as I've previously said it's a complete myth that any company that has a good viable idea, and is willing to invest some of their own personal money, cannot get an existing bank to lend to them. However, it is true that our existing banks do not lend to non-viable businesses that have shot balance sheets and that do not want to risk any of their own personal money in their own business. So are you seriously trying to say that if a start up or established company has actual evidence of orders and a demand for its product or potential product, that a bank will not lend to them? Please get real.
Thidly, I have seen with my own eyes why a uk manufacturer procures from sources outside of the UK. Without naming the company, a manufacturer switched from a UK supplier to a German supplier for certain components. Not only was the component quality better and the deliver more reliable/flexible, but the whole process from start to finish was cheaper! It was therefore a complete no brainer!
Finally, you stated/quoted the following;
"But the CRESC research is especially interesting in highlighting that the trend of overseas sourcing from UK based firms has been especially pronounced; in British machinery and vehicles some 50% of intermediate purchases are imported as against just 30% in Germany where the propensity to import is much lower"
There is a very simple reason for the above, Germany has a large, strong and efficient manufacturing base. They still manufacture just about everything, and have some real quality brands.
We live in a global economy, and the mistakes and arrogance of successive UK Governments means we can no longer compete.
Regards,
Mr Srutineer.
There's in-an-ivory-tower academia and then there's whacked-round-the-head-and-left-bleeding-and-battered reality:
'Similarly, while the recent news of GM's Ellesmere Port being saved from closure after a landmark deal on flexibility and wages was very welcome... , ...As well as huge effort by workers and unions to save the [GM Ellesmere Port]plant, government support was also important, and the challenge now is to use that support so as to foster spillovers in terms of wider capacity building in the supply chain.'
- it doesn't matter a jot whether the workers of the GM Ellesmere Port plant offer to work for tuppence ha'penny, offer up their firstborns to Dan Akerson in GM HQ, or whether the UK taxpayers, through their government, throw ten million, a hundred million, a billion pounds in QE funny-money, in effectively bribes to GM, to save the plant - Vauxhall/Opels ain't selling.
Academia can bang on about pan-European inter-plant wage costs differentials; the presence or otherwise of a facilitating/enabling industrial policy by the local/regional/national government; or the sophistication of the supply chain management organisation; blah, blah, blah.
The fact is GM's Opel/Vauxhall marque is in serious, probably terminal trouble. Its share of the European market is down 15% in the first half of 2012, to less than 7% of the overall market; Hyundai/Kia combined are less than a percentage point behind them; Opel/Vauxhall's motherplant, Ruesselsheim, is about to announce short-time working, to reduce unsold inventory. Ellesmere Port will likely never see the new Astra model promised for 2015 onwards, as by then GM Europe will be down to a husk, with most of its production being supplied from Asia and eastern Europe, if GM itself hasn't gone bust again by then.
The only comparative brightspot for GM Opel/Vauxhall is UK sales. Why? Because they are almost giving cars away in the UK, to anyone with a pulse. The Astra is being flogged on 0% interest financing, 5 years to pay, and a £1,000 deposit, GIVEN by Vauxhall, plus a further £1,000 off the list price of some 5-door models. How is this possible? Because most of the finance is being provided by Santander, not GMAC/Ally.
GMAC/Ally are notorious for signing up 'sub-prime'/poor credit risk punters, but even they have been overtaken by Santander UK bank. Santander are only able to do this as they know that they can get back-door, almost unlimited funding from the European Central Bank, for their parent bank in Spain, and if it all goes wrong, with punters unable to keep up their payments on the car for up to five years, which it will, the bad loans will be dumped over to the ECB, for Europe's taxpayers to bail out and write off, taking the loss, making Europeans higher taxed and poorer, so less able to buy/make the repayments on cars/consumption generally, requiring more 'innovative' financing solutions by the vendors/funding banks for 'sub-prime' customers - by now the vast, vast majority - and so the vicious circle of decline continues until the whole system must inevitably collapse.
Can we please get real with this debate of 'on-shoring', denser, localised supply chains and so on. Anyone with a feel for what's happening on the ground will/should be able to tell you that these issues are being swamped by the overriding issue of survival, for many, many businesses, not just for GM Opel/Vauxhall, due to the crushing of people's real incomes, due to the massively rising cost of living - disguised in official figures - and the dearth of good-paying, permanent jobs.
By sending UK wages to China/India levels, through temping, unpaid internships, importing millions of migrants to drive up competition for jobs, you cannot expect these same people to then be able to afford to pay for the goods they make. Henry Ford, the master of mass production, appreciated this a century ago, but today we turn a blind eye, 'hope for the best', apply for our 'working tax credits', become wards of the state, to subsidise below-subsistence pay levels, and discuss arcane supply chain theory instead. Anything to avoid discussing the 800lb gorilla in the room. Come on!!!
You should take part in a contest for one
of the finest sites online. I am going to recommend
this website!
My brother suggested I would possibly like this website. He was entirely right.
This publish actually made my day. You can not imagine simply how much time I had spent for this info!
Thanks!
Hi! I could have sworn I've been to your blog before but after browsing through many of the articles I realized it's new to me.
Nonetheless, I'm certainly delighted I discovered it and I'll
be bookmarking it and checking back often!
If you are going for finest contents like I do, only pay a visit this
web page every day as it gives feature contents,
thanks
You actually make it seem so easy together with your presentation but I
to find this topic to be really one thing which I feel I would by
no means understand. It sort of feels too complicated and extremely huge for me.
I am having a look ahead to your subsequent submit, I will
try to get the hold of it!
Yes! Finally something about alanya holiday guide.
Nice blog! Is your theme custom made or did you download it from somewhere?
A theme like yours with a few simple adjustements would really make my blog jump out.
Please let me know where you got your theme.
Appreciate it
Please let me know if you're looking for a article writer for your weblog. You have some really good posts and I believe I would be a good asset. If you ever want to take some of the load off, I'd absolutely love to write some articles for
your blog in exchange for a link back to mine. Please blast me an e-mail if interested.
Kudos!
Incredible story there. What occurred after? Thanks!
Hello there, You've done an excellent job. I'll certainly digg it and
personally recommend to my friends. I am confident they will be benefited from this website.
Can I simply just say what a relief to find someone that genuinely understands what they're discussing on the net. You certainly know how to bring an issue to light and make it important. More people have to read this and understand this side of the story. I was surprised that you are not more popular since you most certainly have the gift.
If some one needs expert view about blogging and site-building then i propose him/her to visit this website, Keep up the pleasant work.
That is a really good tip particularly to those fresh to
the blogosphere. Short but very precise information…
Many thanks for sharing this one. A must read article!
Right now it seems like Drupal is the top blogging platform available right now.
(from what I've read) Is that what you are using on your blog?
Have you ever considered about including a little bit more than just your articles?
I mean, what you say is valuable and everything.
Nevertheless think of if you added some great photos or video clips to give your posts more, "pop"!
Your content is excellent but with pics and clips,
this website could certainly be one of the very best in its niche.
Awesome blog!
I’m not that much of a internet reader to be honest
but your blogs really nice, keep it up! I'll go ahead and bookmark your site to come back later on. Many thanks
Since the admin of this web site is working, no uncertainty very
quickly it will be well-known, due to its quality contents.
Hey just wanted to give you a quick heads up. The text in
your article seem to be running off the screen in Firefox.
I'm not sure if this is a formatting issue or something to do with browser compatibility but I thought I'd post to let you
know. The layout look great though! Hope you get the
issue resolved soon. Cheers
Pretty nice post. I just stumbled upon your blog and wanted to say that I have truly enjoyed surfing around your blog posts.
In any case I'll be subscribing to your feed and I hope you write again soon!
Wow, this article is fastidious, my sister is analyzing such things,
therefore I am going to tell her.
I’m not that much of a internet reader to be honest
but your sites really nice, keep it up! I'll go ahead and bookmark your site to come back in the future. All the best
each time i used to read smaller articles or reviews which as
well clear their motive, and that is also happening with this paragraph which I am reading now.
Hey! Do you know if they make any plugins to safeguard against hackers?
I'm kinda paranoid about losing everything I've worked hard on.
Any suggestions?
Howdy! Someone in my Facebook group shared this site with us
so I came to give it a look. I'm definitely loving the information. I'm book-marking and will be tweeting this to my followers!
Superb blog and wonderful design.
Yes! Finally someone writes about alanya holiday guide.
Write more, thats all I have to say. Literally, it seems as though you relied on the
video to make your point. You obviously know what youre talking about, why throw
away your intelligence on just posting videos to your site when you could
be giving us something enlightening to read?
Please let me know if you're looking for a article author for your weblog. You have some really good posts and I think I would be a good asset. If you ever want to take some of the load off, I'd absolutely love
to write some articles for your blog in exchange for a link back to mine.
Please shoot me an e-mail if interested. Cheers!
Everyone loves what you guys are usually up too.
This sort of clever work and exposure! Keep up the
good works guys I've added you guys to our blogroll.
I like what you guys are usually up too. This type of clever work and reporting!
Keep up the amazing works guys I've incorporated you guys to my blogroll.
Nice information, valuable and excellent design, as share good stuff with good ideas and concepts, lots of great information and inspiration, both of which I need, thanks to offer such a helpful information here.
I blog frequently and I truly appreciate your content. This
article has really peaked my interest. I will bookmark your website and keep
checking for new information about once a week. I subscribed to your Feed as well.
Hi there i am kavin, its my first time to commenting anyplace,
when i read this piece of writing i thought i could
also create comment due to this sensible post.
kyxk8aeeg
Your personal message emailed to 500,000 UNIQUE Prospects.
All interested in your service or product. These are not regular emails.
List members joined it by double-optin. Most people find the list high response.
A one time personal-emailing to 500,000 UNIQUE Prospects is just *$9.
95. Use PROMO CODE 227 For A Boost to 1,500,000 Unique Prospects.
Plus, A Lifetime Silver Submitter Access and a Lifetime Global-Marketing Membership!
3b08rd5qw
Howdy would you mind sharing which blog platform you're using? I'm looking to start my
own blog in the near future but I'm having a difficult time selecting between BlogEngine/Wordpress/B2evolution and Drupal. The reason I ask is because your layout seems different then most blogs and I'm looking for something completely unique.
P.S Sorry for being off-topic but I had to ask!
Homeward Bound? Seizing Manufacturing Onshoring Opportunities. Part 2 - Birmingham Post - Business Blog, interesante. Me encanta vuestra web.