Why firms are bringing their manufacturing back home

Reshoring is when a company decides to stop getting its manufacturing done overseas, such as in China, and instead returns the work to its home country. Chris Ball and Ian Whateley are the bosses of Shropshire-based Advanced Chemical Etching (Ace) Ace makes precision metal components for customers in the aerospace, automotive, electronics and telecoms sectors. More than half of UK manufacturers are now reshoring, according to a study. The motives for this shift are complex and varied, but break down into three main groups - economics, risk and politics.

Apple is said to be doing this, as it increasingly moves production from China to India. The big attraction of offshoring in the first place was that it was cheaper and therefore more profitable to make things in places like China or Indonesia. But several factors have worked to reduce those benefits. wages have risen in such countries, while new technology means that Western factories need fewer staff, and are cheaper.

Production runs are becoming much shorter, products are changing much more rapidly. Having access to the manufacturers and the suppliers in a local area makes you much more flexible and that is actually a factor behind this, says Prof Dennis Novy. Then there is the #34;Amazon factor#34;" - increasingly we all demand our new products tomorrow, at the latest. The recent attacks on shipping in the Red Sea and the water shortage crisis that is massively reducing shipping through the Panama Canal have also shown that there are pinch points on supply chains routes that are very risky and unreliable.

In short, you do not get Houthi attacks in the English Channel, or between Mexico and the US. Biden has been throwing hundreds of billions of dollars at making American industry make things in the US, especially microchips. This pledged $52bn (£41bn) to boost domestic production of computer chips. Biden administration is also giving $15.

5bn to the US electric car sector. In 2022 reshoring and foreign direct investment announcements hit their highest rate on record. Mexico exported $475. 6bn of goods to the US last year, up 5% from 2022, according to official US figures.

The Chips Act #34;has spurred on certainly quite a bit of investment#34;" in that sector. Mexico has all the advantages these days - cheap labour, ease and speed of access to the American market. Meanwhile the US imported a total of $427. 2bn from China, a 20% decrease.

But the town of Telford in Shropshire is also doing well.

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