Written by Duncan Nicol, Sales & Marketing Manager- Device Connections
Are we about to experience a resurgence in UK manufacturing? The current crisis has put a spotlight on supply change management and the inherent risks of manufacturing goods in far flung locations at a time when supply routes have become disrupted.
In the early noughties, around the time of the dot-com bubble, a significant proportion of PCB production off-shored from the UK to Eastern Europe and Asia. Driven primarily by lower costs of production in those territories and largely due to lower labour costs.
In the years since the mass migration of volume manufacturing, many small EMS and OEM business continued to serve the UK market locally with just in time manufacturing and short lead times, but at a premium. At the same time PCB production has become highly automated and thanks to new material technologies, larger components such as PCB terminals and headers are now available for automatic pick and place reflow assembly.
Fast forward to 2020 and there are several factors that favour a re-shoring of production to the UK. First and foremost, labour cost differences between the UK and Eastern Europe and China have narrowed as those markets experience sustained growth resulting in the emergence of an affluent middle class. The highly automated production process requires fewer personnel to operate and therefore the cost of manufacturing varies less between east and west.
Logistic costs have increased over the years, both in terms of moving product around but also in storing finished goods ready for market. As a result, supply chains are finely tuned to have just the right amount of product in the logistics chain and capitol is not tied up in stock on the high seas or in warehouses. This does however have inherent risk when supply chains become disrupted as we are experiencing now.
And the final factor is in the rise of the internet and the associated speed of change in technology. Just-in-time manufacturing is critical now in order to keep up with the competition and innovate quickly to meet an ever-changing market.
And so, all the evidence suggests we are entering another golden age of UK manufacturing but only time will tell if this becomes a reality. At Phoenix Contact, we are well placed to support this resurgence with much of our portfolio manufactured in Europe and with a UK based warehouse and local distribution partners holding stock.
For further information on design for manufacturing and how component choice can significantly reduce production costs visit www.phoenixcontact.co.uk/dfm
For more information, contact Duncan on 07799 072059 or email dnicol@phoenixconctact.com
