Pictured: Jonathan Diggines, Chief Executive of EV
2012 could well see a resurgence of manufacturing in the
Midlands as businesses bring production back to the UK, according
to venture capitalist EV.
In recent months EV has seen an increase in companies looking to
re-establish more local manufacturing facilities to enable them to
respond more rapidly to changes in market demand. Jonathan
Diggines, Chief Executive of EV, which has an office in Birmingham,
says that there are also other factors at play including the need
to improve control over quality, protect intellectual property and
reduce working capital.
He believes many UK businesses are looking to shorten their
supply chain: "We are seeing companies starting to question the
seemingly automatic, knee-jerk decision to outsource production to
the Far East. Instead, they are seeking funding to support or
re-establish manufacturing in the UK - perhaps as a dual sourcing
exercise at this stage.
"Rising freight and labour costs are making Asia less attractive
as a manufacturing location, however the critical factor, for the
firms we have spoken to, is the long lead time involved in bringing
stock and vital components from the Far East. Current tough market
conditions mean that businesses must be able to act quickly, to
grasp any opportunities that arise - often to beat the competition
to exploit a niche, which will not sustain a six-week delay."
Jaguar Land Rover, BMW, Toyota and Nissan are large-scale
international businesses which have committed to new plans for
manufacturing in the UK during 2011. EV believes that in 2012
smaller firms will follow suit, to improve speed of reaction and
quality, and to maintain control over valuable intellectual
property rights.
Diggines adds: "Local manufacture allows firms to be far more
flexible and responsive to customer demand - which can be vital
when the market is so unpredictable. They don't have to take the
risk of carrying too much stock. They can also respond more quickly
to rapidly changing circumstances. Many of these businesses are in
industries where trends and fashions play an increasing role and,
in these economic conditions, they must be able to react and
operate in an environment of continual change."