This is one of the findings from the Manufacturing Technology Centre’s inaugural UK Reshoring Index, which analyses UK manufacturing output and import data from 14 Asian low-cost countries (LCCs) to track whether the UK is reshoring manufacturing back from Asia.
The index’s manufacturing import ratio (MIR) - manufactured goods imports from Asian LCCs as a percentage of UK manufacturing gross output - reached 61 per cent in Q3 2021, an increase from 43 per cent in Q1 2018. A higher percentage indicates a lower level of reshoring.
According to the MTC, this increase in the MIR marks the continuation of a decades-long trend, as globalisation and the free movement of goods have led to British companies relocating their production overseas, and consumers becoming more reliant on manufacturing goods produced in low-cost countries.
The increase in the MIR is marked by two key trends, the first being that UK manufacturing output is yet to recover from 2018 levels. In Q3 2021, the latest period of data available, the figure was three per cent lower than Q1 2018.
Growth was hampered mainly by COVID-19. Lockdown measures forced factories to close across the country in March 2020, with hundreds of thousands of workers placed on furlough - in April 2020 the figure stood at 911,000. Consequently, manufacturing output declined by a third during the first two quarters of 2020.
Output suffered again during subsequent COVID outbreaks as new variants emerged. During the spread of the Alpha variant towards the end of 2020, manufacturing firms reported high levels of worker absences. Output fell over five per cent in Q1 2021, the only quarterly decline since the start of the pandemic.
This lead to the UK becoming increasingly reliant on imports to make up for this fall in output and the index shows that throughout 2020 the MIR increased from 44 per cent to 64 per cent.
Second, imports from Asia have been resilient. From Q1 2018 to Q3 2021, the total volume of imports from LCCs increased by 39 per cent. For Chinese imports, the growth was 67 per cent and the trend held up during the pandemic, despite problems in the global supply chain.
While imports from Asian countries temporarily fell during the first year of the pandemic, volumes recovered at a faster rate than UK manufacturing output. Reasons for this include the pandemic starting earlier in Asia, existing resilience from previous pandemics like SARS, and stricter measures that prevented successive COVID outbreaks. As a result, Asian countries were able to meet increased demand when the UK needed it.
In a statement, Dr Clive Hickman OBE, chief executive of the Manufacturing Technology Centre (MTC) and chair of the Industrial Policy Research Centre (IPRC), said: “Our analysis shows that the UK continues to be too reliant on manufacturing imports from Asian low cost countries. We must lead a renaissance in UK manufacturing with a renewed focus on jobs, skills and resilience to encourage the reshoring of industry. These efforts begin with a National Manufacturing Strategy to ensure that the sector is future proofed for the decades to come.
“Focusing on building stronger links between academia and industry, boosting devolved powers to create regional industrial strategies and providing a specific funding pot for Net Zero manufacturing will boost the UK’s industrial capabilities, improve productivity and deliver thousands of green jobs for the future.”
To establish the UK manufacturing import ratio, MTC divided the total GBP value of manufactured goods imports from a basket of low-cost countries by the UK manufacturing gross output in GBP. MTC calculated the value of imports of manufactured goods from 14 traditional offshore trading partners, namely China, Taiwan, Malaysia, India, Vietnam, Thailand, Indonesia, Singapore, Philippines, Bangladesh, Pakistan, Hong Kong, Sri Lanka and Cambodia.
UK productivity hindered by digital skills deficit – report
This is a bit of a nebulous subject. There are several sub-disciplines of 'digital skills' which all need different approaches. ...