Over the past 30 years, more and more UK companies have moved their business overseas – attracted by lower labour costs in countries like China.
But with those costs now starting to rise, and confidence at home increasing, British companies are beginning to return – offering the potential of thousands of new UK-based jobs.
And British manufacturing in particular is set to benefit.
A decade ago, British businessman Tony Caldeira closed one of his UK factories, at a cost of a hundred jobs and moved the bulk of his production to China. He feared that otherwise, he would go bust.
But ten years on - Tony’s back in China for a very different reason. This time, he’s downsizing his China operation and moving production back to the UK.
And he is not alone. Twice as many small and medium sized companies are bringing production back to the UK as are sending work overseas, according to a recent survey by the Manufacturing Advisory Service.
I think people had forgotten that manufacturing was important, in creating jobs, goods, productivity and exports.”
British manufacturing has a long way to go to catch up. In the 1960s it employed 9 million people. Now it’s down to 2.5m. Major industries like commercial shipbuilding in the North East have disappeared.
Now a revival in British manufacturing is being built on a series of factors like: wage inflation in places like China; increasing transportation costs and exchange rate changes.
And there is the realisation that “Made in Britain” is helping sell products round the world.
The programme follows cushion manufacturer Tony Caldeira to New York where he pitches to sell his products to a major retail store that only wants to buy his British-made product.
And we speak to shoe designers Neon Footwear who say that one of the reasons they plumped to manufacture their shoes in the UK rather than China is that “Made in Britain” sells very well in the Far East.
It’s not just manufacturing that’s bringing jobs home. Over recent years, thousands of banking and insurance jobs were lost when call centres were outsourced to countries like India in an attempt to cut costs.
Now some are reversing their decision, bringing call centres and jobs back to the UK. That includes Santander UK.
Customers wanted a service where they spoke to people in the UK and equally they wanted Santander as an employer to create jobs so making the decision we did to return created over five hundred jobs in the UK.”
But the prospects of thousands of new manufacturing jobs could be stymied by a shortage of skilled workers.
It’s been estimated that the UK needs to produce 110,000 new science, technology and engineering graduates annually. And though the government is putting more funds into training and apprenticeships, experts say we are still falling short.
It’s a big issue in car manufacturing, says Mike Hawes, of the Society of Motor Manufacturers and Traders. Car companies want to expand and build on current manufacturing already taking place in the UK.
The iconic names like Land Rover, Jaguar, Mini, Bentley, Rolls Royce, Aston Martin, these are brands that are known worldwide and loved worldwide. As a country we need to develop more engineering graduates because the opportunities in this industry are great. The risk is we don’t take advantage of those opportunities because we don’t have enough engineers.
Cushion manufacturer, Tony Caldeira, admits he too is struggling to find enough skilled workers to keep up with demand. But he remains upbeat about the prospects for UK plc.
We are going to have to find ways and innovative solutions to get young people interested in manufacturing jobs. I’m an optimist and I think that we can do this. I think Britain can actually compete in 2014.”
Tonight: Is Britain Back in Business? is on ITV tonight at 7.30pm