Shortening British Manufacturing Value Chains: Onshoring or Reshoring?

The instability of an imbalanced economy in the UK before and after the Global Financial Crisis has refocused attention back to considering the benefits of re-industrialising Britain. We believe that the current interest in the manufacturing sector has to be pushed by two parallel emerging agendas and forces: one is the crucial importance of new firms formation in the light of the recent “distributed manufacturing” literature and the other is the opportunity for larger firms to shorten their value chains by seeking subcontractors closer to home.

The current paper explores both arguments. It examines the drivers of, and bottlenecks to, such forces in the UK context, as well as more global developments (persistent austerity, cheap oil, China’s slowing growth, the possibility of 'Brexit' and EU deflation and stagnation). We also explore whether current UK policies have created the context to seize on some of these opportunities and paved the way for the development of a more competitive manufacturing sector.

The paper starts by considering the current debate on the “new manufacturing” and what are the implications of this in the UK as well as the UK’s readiness in the EU context. It presents evidence of sector dynamics by considering firm size and spatial composition. It then integrates this with current considerations on reshoring trends in some sectors by analysing reshoring in manufacturing and automotive in particular. Shorter lead times, for example, may be linked in some cases with more bespoke manufacturing activity where consumers co-create product with manufacturers; and where manufacturing is therefore as much value and design or product development.