Fast-Fashion Retailers Claim Bringing Manufacturing Back Home to the UK Is Not All about Lowering Costs. but They Would Say That Wouldn't They, so What Is the Reality for a Local Workforce

The re-shoring of production and services back to the Global North from developing countries in the South highlights the need to explore the rationale for this latest trend in corporate behavior. Such action raises questions regarding the business environment and governance structures in the home countries of returning firms. For instance, what impact does the constant de-regulation of financial systems and labour markets in the North have on the decision-making processes of firms to re-shore the labour-intensive activities in their operation that were so readily moved off-shore just a decade or so before. During the last ten to fifteen years there was a rush to shift operations to low-cost providers, which in the main were located in developing countries. An exodus that precipitated suggestions of a ‘race to the bottom’ for labour conditions in some sectors, e.g. apparel manufacturing (Dicken, 2011). So what has changed to reverse such a trend, the drivers and rationale for such corporate action are unclear.

There is some evidence, in the apparel manufacturing and call centre sectors, to suggest that the act of re-shoring is part of a broader strategic review to regain comparative advantage in home markets. The advantages of returning production and services to the UK and other EU member states are explained in terms of increased ability to more closely link local production with local markets, as in the case of fast-fashion where the agility of the lead firm to react to quick-changing and seasonal market requirements is paramount (Kurt Salmon, 2014). For call centers, the accomplishment of stretch targets of customer response times and satisfaction rates in call centers appear to justify the case for re-shoring (Taylor et al., 2014). But what impact does this have on the work force and labour conditions in the UK, where the market is deemed to rule and as such, has the potential to lower labour standards and undermine employment rights.

The paper draws on research focused on how firms have undergone a change from outsourcing certain ‘product activities’ to low-cost producer counties to a position of re-shoring key ‘product activities’ in order to maintain a competitive position in the firm’s home country. The advantages, e.g. better quality control and quick market response, are seen to outweigh the disadvantages, e.g. higher labour costs. But, what impact does this shift of production have on the work force and labour conditions in the UK, where the market is deemed to rule and as such, has the potential to lower labour standards and undermine employment rights. By adopting a global value chain (GVC) framework, to review the forms of governance structures prevalent in international supply chains (largely in mid-fashion retailers), the paper explores the value-added capacity and potential comparative advantage of firms re-shoring, whilst at the same time, examining the impact on employment conditions of a highly skilled local workforce.