Companies may be reshoring - but more jobs are probably still leaving

A report says 70% of automotive manufacturers are planning to reshore jobs, but plenty of companies are still moving production overseas. Hardly reassuring.

by Rachel Savage
Last Updated: 08 Dec 2014

‘Reshoring’ was David Cameron’s favourite made up word earlier this year, as he urged companies to move jobs back to Britain. But while many have heeded the PM’s call (insofar as they made a business decision), the jury is out on whether this nascent trend is outweighed by businesses still taking jobs offshore.

A report commissioned by Lloyds bank released today estimated 70% of automotive manufacturers are planning to move an average of 29% of their business back to the UK in the next two years. And some 45% have apparently already shifted an average of 20% of production back from overseas.

There are a couple of question marks over the research. It only surveyed 100 companies out of an estimated 2,089 in the industry, although even with a sample size that small a majority of them are probably planning to reshore. Plans, though, may not come to fruition. And, finally, the study doesn’t appear to have asked whether any of the manufacturers are also looking to move other production out of the UK.

It does fit with other recent research on reshoring, though. A PwC report in March estimated the trend could create 100,000-200,000 jobs in the next decade. A Warwick Business School study of mid-market firms (annual revenues of £15m-£800m) was even more bullish: projecting 378,000 new jobs from those companies in the next three years. Earlier this year, manufacturing trade body EEF found one in six businesses had reshored some production in the last three years.

But Marcus Gibson, whose Gibson Index database covers some 50,000 small and medium-sized companies, told the Economist this week that only 64 companies had moved jobs back to the UK in the six months to August, based on a report commissioned by think tank Civitas. And, as with the Lloyds report, none of the reshoring research takes into account ongoing offshoring. Even EEF economist Lee Hopley admitted, ‘There is probably still more production going the other other way.'

Being able to trust in quality after being bruised overseas and staying close to suppliers are incentives for manufacturers to stay put or bring jobs back. But skilled workers are hard to find and Britain’s long industrial decline means there is a better supply chain abroad in many cases. Unless there is a drastic policy upheaval, this trend’s probably only going one way.

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