Out-Law / Your Daily Need-To-Know

PwC: UK manufacturers could "re-shore" up to 200,000 jobs by mid-2020s if trend continues

Out-Law News | 12 Mar 2014 | 2:24 pm | 1 min. read

Between 100,000 and 200,000 jobs could be created in the UK manufacturing sector over the next decade assuming factors influencing the current trend towards 're-shoring' the supply chain continues, according to PwC.

New analysis by the professional services firm forecasts an increase to UK GDP of around £6-12 billion by the mid-2020s as a result of re-shoring, which occurs when firms bring back production to the UK or source components from UK suppliers.

"The trend to re-shore is still at a very early stage, but our analysis suggests that the impact on jobs and output could build up gradually to material levels over the next decade or so," said John Hawksworth, a PwC economist. "Of course, some jobs will also still be offshored over this period, but it should be much more of a two way street going forward."

"Policymakers can support this trend towards re-shoring by encouraging the formation of centres of excellence, upgrading infrastructure to provide more efficient transport services, working with employers to boost skills, and maintaining an internationally competitive tax regime in the UK," he said.

Since the 1990s, an increasing number of manufacturers in the UK and other developed economies have offshored certain activities to developing economies where labour costs are traditionally cheaper. However, recent research by EEF, the manufacturers' organisation, has indicated that this trend is beginning to reverse. EEF members have cited improved quality of products and components, closely followed by speed of delivery and minimised logistics costs, as their reasons for doing so.

In its report, PwC said that examples of re-shoring activities back to the UK were beginning to crop up in a number of different industry sectors. The trend was most noticeable in textiles, computers and electronics manufacturing, the firm said. Its report said that between 30,000 and 60,000 jobs could be created in the UK in the textiles industry alone over the next decade.

PwC said that the trend could also have a knock-on effect on employment in other industries. It said that an additional 20,000 jobs could potentially be created in the business support and telecommunications sectors, citing "some evidence of telecommunications businesses" re-shoring customer services functions and call centres.

"Even though this sector is not labour-intensive overall, we believe that this kind of function could well be a candidate for re-shoring more widely in the telecoms sector," it said in its report.