Is it time to bring large scale industry home again?

With rock bottom wages and a massive workforce on offer, the practice of UK companies in bringing industry home and moving their production bases and facilities to developing countries such as China has become standard business practice over the last 40 years or so. In this blog, we look at how the lack of proper background screening practices has contributed to a reduction in product quality and product counterfeiting, however, and caused untold damage to brand reputation resulting in many companies now deciding to bring their manufacturing and service bases back home in order to safeguard their reputation, products and standards.

With Brexit and President Elect Trump currently dominating the political landscape, it appears that inward looking politics and a rejection of the political elite’s obsession with globalisation in both Europe and USA is on the rise. With even the NAFTA policy being reconsidered by Trump, the days of favourable import rates for cheap foreign goods and lack of protection for home-based companies seem to be coming to an end.

The low wages and expansive labour markets on offer previously made the offshoring of jobs and manufacturing a business necessity for many UK companies. In addition to this, previous governments stated that UK businesses didn’t need protection from cheap foreign imports or a prohibitive import tax that would have made importing less attractive. This approach ultimately decimated British manufacturing, with research by Gibson Index stating that around 95 per cent of the companies involved in British light manufacturing disappeared from the UK during the Tony Blair and Gordon Brown era.

But since then the implementation of a minimum wage in China, a 15-22% labour cost increase every year and a long-promised transition from an industrial economy to a domestic economy underway, the competitiveness of China as a manufacturing sector has weakened considerably.

Companies plan ahead

Companies like Dyson, Hornby, Aston Martin and Burberry had the closures of their UK centres widely publicised and were heavily criticised for choosing to offshore their businesses. As many of them now reconsider their position, an additional factor that may swing the argument back in favour of reshoring is the issue of Intellectual Property (IP) theft. In their rush to save money on production, China’s lack of proper background screening practices and acceptance of, and general attitude towards, counterfeit goods was widely overlooked. Causing massive loss of profits and damage to brand reputation, it could therefore be one of the leading factors in the decision for brands to ultimately bring production and jobs back to the UK. Some of the European and American industries that have had products cloned and mass produced in much lower quality include high value sectors  such as IT, smartphones, luxury clothing and accessories, makeup, prescription medication and sporting goods.

With rising costs, counterfeiting and a change in the geo-political landscape, we could therefore potentially be looking at the start of a return to large scale home-grown production. With this shift in business practice comes the need for re-staffing and the re-building of a competent and trusted workforce, with a thorough and reliable background screening process required in order to rectify mistakes previously made through offshoring.

If you or your company is thinking about or in the process of reshoring and require background screening services employees, please contact CBS on: 01443 799 900 or email us on: info@cbscreening.co.uk