In “The World Is Flat: A Brief History of the Twenty-first Century,” Thomas Friedman’s 2005 book, the author pictured a utopian vision of an integrated, globalized world. However, after almost twenty years and the disruptions in the supply chain caused by the global pandemic and geopolitical conflict, it seemed that, in retrospect, Friedman’s book was quite a bit ahead of its time.

Offshoring, a strategic decision made by companies to relocate their manufacturing operations to foreign countries, gained popularity in the 1990s. Companies were enticed by the government’s incentives and the low labour cost in China. This led to a surge in manufacturing activity in China and the establishment of a long supply chain connecting Europe and the US to China and other countries.

However, the tide has turned gradually, and we now see an increasing trend towards reshoring. According to one study at the start of this year, more than half of UK manufacturers (58%) are now reshoring - a process in which companies move production from overseas to the countries where goods are sold.

90% of manufacturers engaged in the reshoring process report successful outcomes.

A significant quarter of them (26%) enjoy enhanced value and heightened security while simultaneously witnessing reduced costs (24%). 82% of manufacturers plan to increase the pace of reshoring within their supply chains over the next two years.

The motives for this shift are complex and varied, but they can be divided into three main groups: economics, risk, and politics.

Offshoring became popular mainly due to its cost-effectiveness, as manufacturing of goods in countries such as China or Indonesia was much cheaper due to the availability of low-cost labour. However, a few factors have contributed to diminishing these advantages over time.

Firstly, wages have increased in some countries, while new technology has reduced the number of workers required to operate factories, making production cheaper. Additionally, the rapidly increasing pace of product development is fuelling this trend. Almost everything, including phones, TVs, and gaming terminals, is constantly improved, changed, and updated.

Prof Dennis Novy, an expert in trade economics at Warwick University, explains, “Production runs are becoming much shorter, products are changing much more rapidly, and actually having access to the manufacturers and the suppliers in a local area makes you much more flexible and that is actually a factor behind this.”

The other major challenge that drives companies to consider reshoring today is meeting the growing expectations of customers who want their products delivered as soon as possible. This is commonly referred to as the “Amazon factor.” If a product is manufactured nearby, delivering it quickly is relatively easy. However, if it is manufactured on the other side of the world, there may be delays in shipping, or the company may need to keep large inventories on hand to fulfil urgent orders. This can be expensive for the company, and the inventory may become outdated as soon as the product is updated.

In addition, the Covid pandemic has highlighted the risk factor associated with our long, stretched and vulnerable supply chains. It reminded us of the importance of being self-sufficient for essential items instead of relying on factories located in far-off places and shipping them over vast distances.

The recent assaults on shipping in the Red Sea and the water shortage crisis that has severely impacted shipping through the Panama Canal have highlighted the fact that there are vulnerable points in supply chain routes that are highly risky and unpredictable.

US and European leaders have been advocating for the return of manufacturing, which has become a matter of national security. Western governments have realized they overly rely on potentially hostile nations for their vital technology and supplies. Thus, bringing manufacturing back home is not only a patriotic move but also a practical one.

Reshoring is becoming increasingly prevalent not only in the UK but also in the US. The Reshoring Initiative, a business group that tracks reshoring developments, reported that in 2022, the US manufacturing sector saw its highest rate of reshoring and foreign direct investment announcements on record. This trend continued during the first half of last year, with a projected 300,000 new jobs likely to be created by the end of 2023.

It’s clear that reshoring is gaining momentum.

Steve Davies, Managing Director at Crossfield Excalibur, a long-time partner of GM Business Growth Hub based in Bury specialising in rotational moulding toolmaking, metal fabrication, design, and powder coating, said: “We have been doing a lot of work for a food manufacturing facility located in Trafford Park. Recently, they asked us to provide a quote for a larger volume of work that was previously outsourced from overseas. The purpose of this is to establish a more efficient supply chain and to have better control over the quality and lead times that are currently causing them issues.”

Are you a manufacturer in Greater Manchester considering moving your production base back from the troubled Far East to the origin where the Industrial Revolution started? Our team of manufacturing experts are here to assist you in the process. All you need is to contact us and ask: