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Bringing it back home: the solution to global supply chain vulnerabilities?

07 December 2011

The fragility of global manufacturing supply chains - particularly their vulnerability in the face of natural disasters - has been brought sharply into focus recently, with flooding affecting industry around the Thai capital and, of course, the tsunami that devastated a huge area of north eastern Japan earlier this year. Quite apart from the humanitarian consequences, these recent events had a notable effect on the delivery of components to manufacturing sites around the world. Disrupted supply chains resulted in short-time working at plants and factories many thousands of miles from these disaster sites.

Launching the £125m Advanced Manufacturing Supply Chain Initiative last week, business secretary Vince Cable said he wanted to seize on the increased preference that big global companies are showing for co-locating key elements of their supply chains with their UK manufacturing operations. The CBI's John Cridland welcomed the initiative, believing it will help build UK supply chain capability and resilience. “It will enhance our manufacturing competitiveness and build on strengths in advanced engineering, research and innovation,” he said.

The Engineering Employers' Federation's Terry Scuolar is also enthusiastic and thinks the timing of this announcement is spot on, with many companies now responding to the shocks of recent years by looking afresh at how they manage their supply chains. “Now is the right time to provide a serious boost to our domestic capability,” he says.

The potential to stimulate new technologies and build stronger supply chains in the UK is very considerable. The Automotive Council, a joint industry-government partnership, has already identified over £1bn worth of potential contracts that manufacturers would like to place in the UK. By way of an example, more than £250m worth of contracts have already been repatriated by General Motors in the UK since 2010.

While it is potentially a welcome fillip for UK advanced manufacturers seeking to serve large customers on their own doorsteps, it is difficult to discriminate between the ‘localism’ suggested by this latest funding initiative and the border-closing mentality of erstwhile globally trading nations at times of economic uncertainty. I don’t think, for one minute, that this was the inspiration behind it, but the law of unintended consequences does apply and we might exercise caution when clawing back work from our global trading partners.

Applications to the fund will be assessed by the Technology Strategy Board. Expressions of interest can be made later this month, with formal bids following early in the New Year.

Les Hunt

Reader comment:

From Mr Graham Sayer:

I fully agree with the contents of your article. It would be fantastic to see UK manufacturers given the opportunity to be part of the UK supply chain after many years of business being moved to low cost economy areas. We ourselves are a midlands based forging company and would welcome the opportunity to offer our products and experience to companies looking to source their forgings locally. Mills Forgings Ltd 

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