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Jobs Lost to Asia Reappear in UK

Jobs lost to Asia reappear in UK [Daily Mail, London]

From Daily Mail (London, England) (November 16, 2011)

Nov. 16--THE Americans call it 're-shoring' -- bringing back manufacturing jobs that had been lost to Asia. Here, in the UK, companies are also discovering that global increases in commodity and labour prices mean that Asia's low-cost manufacturing advantage has been eroded.

GlaxoSmithKline is perhaps one of the biggest British companies that is bringing production back to these shores. This summer, GSK brought the manufacture of a steroid called betamethasone, used to treat eczema, back to its Montrose facility.

By the end of the year, the company also expects to choose one of four UK sites for its new biopharma facility -- GSK's first new UK factory for 30 years.

Andrew Witty, chief executive of the pharmaceuticals giant, says that the Government's new tax treatments of patents, as well as the decrease in corporation tax, have swung the balance towards the UK.

A spokesman for GSK added: 'The new biopharma facility will create around 1,000 highly-skilled jobs. We have always said that we would prefer to locate our manufacturing facilities here, close to our research and development, but in the past governments like Singapore would offer much more favourable tax environments.'

The company is also considering bringing some back office services back to the UK.

In the car industry, too, there has been significant investment in UK production. GM Vauxhall has now repatriated pounds sterling 200m of supply chain work back to the UK since July 2010, according to the Department for Business.

Jaguar Land Rover recently announced a pounds sterling 355m investment in an engine plant in Wolverhampton, which will create 750 jobs. JLR, which started production of a new model in Merseyside this summer, has also awarded pounds sterling 2bn of supply chain contracts to 40 British firms.

Amongst small businesses, as well, there is renewed enthusiasm for local sourcing. Laxtons woollen mill was established in Yorkshire in 1907. But by 2000 all of its production had been moved overseas.

Yet in 2009, at the height of the recession, James Laxton, great grandson of the company's founder, opened a woollen mill in Guiseley, West Yorkshire, after scouring Europe for new machinery. 'I believed that we could do a better manufacturing job ourselves, producing higher quality goods and a better service for our customers,' Laxton says.

The risky outlay on new equipment has paid off. Wool has increased in value three-fold in the last 18 months, due to its relative scarcity, and the mill has prospered by pitching its products at the luxury, British-made goods market.

Laxton's worsted yarn, spun from British breeds, is sold to Rowan, the knitting yarn specialist, and supplies brands including Jaeger, Jigsaw and Daks.

Not far away in Leeds, AIM-listed Surgical Innovations has seen a similar increase in quality by bringing its high-tech manufacturing back to the UK.

Doug Liversidge, chairman of the fast-growing keyhole surgery technology company believes that the time is right for other manufacturers to do their sums again. 'Bringing manufacturing back home has paid off for us. We have since trebled our workforce here in Leeds and our quality has significantly improved,' Liversidge says.

Manufacturers around the world have had to grapple with a 30pc year-on-year increase in a basket of commodity prices in the first five months of this year, according to the IMF. At the same time, oil prices have been volatile but the long-term outlook for energy prices, globally, is only higher.

Supply chains from emerging markets have also turned out to be riskier. Orders can take months to fulfil and there is a widespread disregard for intellectual property.

Now an increasing number of high street retailers, including Sir Philip Green's Arcadia group, are looking closer to home to source products.

Recently, N Brown, the home shopping retailer, doubled its UK suppliers, boosting small textile manufacturers in Leicester and Manchester. Yet bringing manufacturing 'back home' may not be such a good thing, according to Professor Richard Dashwood at Warwick University's Manufacturing Group. 'Most of the work that has gone offshore has been at the high value, low volume end of the market. Do we want to send out the message that the UK is now just as cheap as Asian economies for manufacturing?' he asks.

Manufacturing in the UK now contributes roughly 12pc to GDP, but it represents half of Britain's exports and has higher productivity than other activities. When politicians talk about rebalancing the economy, it is the high-tech, knowledge and skill-based jobs they favour and, indeed, the UK has world-beating companies in these areas.

Realistically, many low-cost manufacturing jobs will never return to these shores, but global trends in commodity, energy and labour prices mean there is a window to bring skilled manufacturing jobs back to Britain.


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Posted: November 2011