For many years, businesses have sought ways to cut costs, from outsourcing day-to-day tasks, to reducing transport costs. However, as times change, business methods that were once considered economically advantageous are no longer viable. This is particularly true in terms of manufacturing overseas, where companies are typically able to take advantage of cheaper labour and materials expenditure.
It appears that the combination of a fragile global economies, concerns over quality, and the substantial rise of eco conscious shoppers has seen a growing trend in companies choosing to reshore. Surprisingly, manufacturing at home could raise company profits, too.
Brexit and the Great British Pound
In the UK, the pound has continue to decline. Add to this the fears about how Brexit will continue to affect the country’s economy as well as worries about the single market, and it is understandable that company’s may be fearful about how the referendum will impact business.
While the depreciation of the pound has made the British currency more attractive globally, with overseas purchasers getting more for their money, the price of imports has risen drastically. With import costs rising, it is easy to appreciate why businesses may choose to manufacture domestically. Although production costs are typically higher in the UK, companies are saving on transport and import costs, as well as storage and inventory.
Environmental and Ethically Conscious Customers
Coinciding with Brexit, recent research has shown that consumers are becoming ever more conscious with regards to eco concerns. In addition to brand trust, environmental, social and ethical considerations score highly with millennials, so much so that those in the age bracket of 18-35 would pay more to buy from a brand that shares their values.
As the world is becoming more open and connected, customers are actively seeking eco conscious businesses, profiting those who pay fair wages, reduce their carbon footprint, and produce their products at home.
Concerns Over Quality
Quality is a growing concern for companies and consumers alike. While products produced cheaply overseas are increasingly being made to higher standards, many businesses still fear quality issues. This is perhaps of greatest concern to startups and SMEs, who do not have the same money or resources as multinational corporates, which could lead to catastrophic consequences.
On the other hand, manufacturing domestically in the UK means that goods must comply with British standards, regulation and Quality Assurance, reducing the risk of poor quality products and thus, disappointed customers.
The number of businesses choosing to manufacture at home is on the rise (particularly with engineering and car firms), a trend that is set to continue and could see an increase in company profits.