In the last 12 months we have seen a massive amount of Cable Assemblies and Electronics being brought back into the UK for manufacturing. This is great news, so let us take a look at why this shift, focusing specifically on Cable Assemblies.
There are 5 main reasons for the re-partition of assembly work and they are:
1: Cost of transport
The rising costs of transportation are starting to have a massive effect on the overall cost of our goods. For example, the transportation of many heavy goods such as power cables can be as much as 30-50% of the overall cost of individual shipments. These costs are bound to rise.
2: Cost of labour
It is a well-known fact that labour costs in China have risen and continue to do so. This is all down to the necessary rise in wages paid to factory workers, and as their economy develops more and more workers will be able to have the choice on what companies they work for and what wages they will accept.
We know that the labour market in China is very fluid and workers have begun to move around for the best paying jobs; this is starting to bring about for factory owners as they struggle to retain highly- skilled workers.
3: Time to deliver
Typical lead-times are 10-16 weeks, and with today’s need for speed we just can’t wait that long. The UK’s factories have understood the challenge of quick delivery and risen to the challenge. With the adoption of assembly automation, high volume with quick turnaround is a reality.
4: Quality
In defence of China, their reputation in manufacturing needn’t be as bad as it often is. However, their biggest issue with quality is what to do when there is a problem. For example, having waited 12 weeks for your parts to arrive you discover a problem when they finally reach you – how do you resolve this when you now urgently need the parts?
The sad reality is that you have to ship the parts back to the factory and wait for them to make the necessary repairs and return the parts to you, which can take weeks. In the meantime, you could lose future orders or have to resort to getting a UK factory to provide products on a quick turnaround. That will make you wish you had just given the order to them in the first place!
This has become a very common situation and where the total cost of production makes the UK look very attractive.
5: Shifts in China’s Focus
China is starting to focus on higher end manufacturing to service their rapidly-growing middle classes. In addition to this, we will see a rise in China’s branded products entering western markets. An interesting example of China’s up-scaling is the fact that they now import more LED’s from Germany than they export back.
Conclusion…
There will always be a place for low-cost manufacturing, however when the total cost of purchase is considered, the UK can make a very attractive proposal. It’s simple – work with your suppliers in the UK and receive a great service and on-time deliveries at the price agreed…with little stress.
Take a look at this interesting video from the Wall Street Journal which provides an interesting insight to this.
