Saturday, 27 July 2013

Is it too late to 'bring manufacturing homer'?

Both the US and the UK are experiencing a mini-revival in manufacturing with firms re-locating manufacturing processes from offshore to back home.

Well, that;s what the media  - and the companies involved - would have us believe.

However in most cases, 'manufacturing' means 'assembly'.  The production - or sourcing - of components is still outsourced .. only final assembly takes  place at 'home'.

Take the position of a firm making complex, engineered products. If they need a new type or size of screw for  a new product , then in Shenhzen, China they can get a prototype made within 24 hours and production ramped up into the thousands within a few days.  Back 'home', those support services went when manufacturing was outsourced.  It takes many years to build up this kind of supply chain flexibility but a very short time to destroy it.  So outsourcing of components is almost bound to remain outsourced.

The horse has not only bolted.  we have locked the stable and thrown away the key.

Of course it is good to see the current moves to home assembly (even if in some cases, it seems to be as much about PR as operational efficiency).   But don't expect either the UK or the US to suddenly revert to the manufacturing powerhouses they once were.

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