Moving Manufacturing out of UK
Discussion
Hi everyone.
I have been thinking for a while now about moving the manufacturing side of my company out of the UK. Unfortunately I seem to be in a constant race to the bottom on price as my industry is not in the best of health so having to fight for every order. All of my competitors are manufacturing in Asia I compete because we are smart with our design and small over heads. The last minimum wage hike and rising material costs are finally making me think hard about moving. Which makes me a bit sad as I like having it all here.
Trying to come up with pros and cons.
Pros:
Depending on we’re I manufacture I could save from 100k to 150k. That would be profit that I could reinvest or simply put in my pocket.
Finding staff. I make high tech clothing finding sewing machinist here is getting harder and harder. Most of my employees are from the eastern block i know this would not likely be a problem as it’s still considered a skill out there.
I would ideally like to use a company to carry out the work as opposed to setting up my own factory. So I can avoid the hassle of employment issues. They can be some one else’s problem. I have to disciplinary hearings this week and I hate doing them.
Cons:
Control. I have got very used to being able to walk into any part of my production and fix problem. Obviously not so easy if it’s a flight away and requires a lot of trust.
My products are safety products so I have lots of certification that I need to maintain. I am also very mindful that I need to guarantee the quality for my own piece of mind and reputation. So I would be having the product sent back here to apply our quality control and apply the label that holds our certification. This is all added complication.
Would have to make quite a few people redundant which would not be an easy thing to do. Could also be quite expensive.
It’s a massive change which can of course be good but it is a risk.
Can’t think of any others at the moment I’m sure more will come to me.
Has anyone done something like this before? Any and all advice is welcome.
I have been thinking for a while now about moving the manufacturing side of my company out of the UK. Unfortunately I seem to be in a constant race to the bottom on price as my industry is not in the best of health so having to fight for every order. All of my competitors are manufacturing in Asia I compete because we are smart with our design and small over heads. The last minimum wage hike and rising material costs are finally making me think hard about moving. Which makes me a bit sad as I like having it all here.
Trying to come up with pros and cons.
Pros:
Depending on we’re I manufacture I could save from 100k to 150k. That would be profit that I could reinvest or simply put in my pocket.
Finding staff. I make high tech clothing finding sewing machinist here is getting harder and harder. Most of my employees are from the eastern block i know this would not likely be a problem as it’s still considered a skill out there.
I would ideally like to use a company to carry out the work as opposed to setting up my own factory. So I can avoid the hassle of employment issues. They can be some one else’s problem. I have to disciplinary hearings this week and I hate doing them.
Cons:
Control. I have got very used to being able to walk into any part of my production and fix problem. Obviously not so easy if it’s a flight away and requires a lot of trust.
My products are safety products so I have lots of certification that I need to maintain. I am also very mindful that I need to guarantee the quality for my own piece of mind and reputation. So I would be having the product sent back here to apply our quality control and apply the label that holds our certification. This is all added complication.
Would have to make quite a few people redundant which would not be an easy thing to do. Could also be quite expensive.
It’s a massive change which can of course be good but it is a risk.
Can’t think of any others at the moment I’m sure more will come to me.
Has anyone done something like this before? Any and all advice is welcome.
I am looking into a similar thing but I am concerned about my IP & would possibly prefer my own factory to maybe cover me but if I can find the right partner I might be willing to work with them.
I have also thought of just bringing in component sub assembly sections which might protect the IP.
I will follow your post with interest
I have also thought of just bringing in component sub assembly sections which might protect the IP.
I will follow your post with interest
As a Chartered Manufacturing Engineer, Six Sigma Black Belt and Lean Practitioner, who works freelance as a manufacturing engineering consultant, I've come across so many mistakes in the outsourcing of parts manufacture, leading to serious supply and quality issues.
If you'd like a diagnostic, myself and an associate might be able to help you come up with a different strategy.
I have to say I'm biased. This country needs to export. Not import.
If you'd like a diagnostic, myself and an associate might be able to help you come up with a different strategy.
I have to say I'm biased. This country needs to export. Not import.
I've had products made in China for years, the UK can't compete as it's labour intensive.
Don't worry about dealing with companies in Asia. Do your homework, find the right company and start building the relationship.
Can you start with a small product to test a small run and then decide after that?
Don't worry about dealing with companies in Asia. Do your homework, find the right company and start building the relationship.
Can you start with a small product to test a small run and then decide after that?
soad said:
NMW?! No one in their right mind would work for that.
What’s wrong with people pushing themselves?
Loads of places (agencies are to blame also) pay just that, f
k all. No wonder you struggle finding/retaining quality staff.
I don’t mean to come across all negative, forgive me.
I don’t pay NMW. I keep all of my employees a percentage over the national living wage. So when the minimum goes up 5.6% I apply that across the board because I see that as fair. Perhaps I am to nice but I don’t like seeing my employees just watch the minimum wage creep up to them I think it shows a lack of respect to the hard work they do. Plus I have staggered pay so if the less productive employees get pushed up by the minimum wage it brings them closer to the better ones which is again not fair.What’s wrong with people pushing themselves?
Loads of places (agencies are to blame also) pay just that, f
k all. No wonder you struggle finding/retaining quality staff.I don’t mean to come across all negative, forgive me.
Thanks for everyone’s offers so far. I already have connections and a plan of how to do it. More just a matter if I should.
If it makes anyone feel better I export 88% out again after the product was finished.
VEIGHT said:
I've had products made in China for years, the UK can't compete as it's labour intensive.
Don't worry about dealing with companies in Asia. Do your homework, find the right company and start building the relationship.
Can you start with a small product to test a small run and then decide after that?
I was thinking of starting with one of my less successful lines out there first so less pressure on it all working out immediately.Don't worry about dealing with companies in Asia. Do your homework, find the right company and start building the relationship.
Can you start with a small product to test a small run and then decide after that?
25 years in Asia and I'm setting up a clothing business with my daughter, who is an Indonesian citizen, so a few practical considerations,
Don't underestimate the bureaucracy, both in cost and time, as a simple example my daughter had to fly 1000 miles to register for tax, as this had to be done in the Provence she was born in not where she lived now or where the factory is based.
Always make sure that the person selling you something owns it, People will offer you a lease on property and only once you've accepted they will then try to lease it from the real owner.
Make sure you stay in control, e.g. In Malaysia 51% of your company will need to be locally owned by an agent, I'e worked for two major UK companies who left Malaysia because they couldn't keep control of IP.
Check if the labour force is available local, e.g, there is no local labour in Malaysia you will end up employing Burmese and Bangladeshis, may as well set up in Bangladesh, same in Indonesia you set up in Jakarta but all your labour are from many miles and hours away. A friend of mine has a specialist car business, his nearest employee lives 8 hours away, so he has to have bunk houses, food etc and it causes huge disruption at holidays.and all sorts of issues around people management that he doesn't really need.
When you look for a partner don't confuse the ability to speak English with intelligence, honesty or integrity, this is such a simple mistake but I've seen loads of examples including one UK PLC who employed a well know crook, against my advice, I stopped consulting for them over it, and it was 3 years latter they phoned me up to apologies, but he talked a good story.
Be aware of corruption, its not as bad as some will say, a smile and a thank you works wonders even at government levels, but if you start paying coffee money you will never stop.
Be aware of gangs, I know of two major oil companies that effectively pay 'protection' money. Delivery companies are particularly prone to this they dived up area geographically and will not cross each others boundaries.
Leases are an issue, you will get an offer of low rent, on short term lease, then when you invest in the property and build a name the Owner will try to increase the rent. I know loads of people this has happens to.
Remember there is no zoning so try to ensure the business near you are compatible, both as a process and image, you don' want a fine clothes factory next to some smelly factory
With your eyes open you will be OK there is nothing that is a show stopper.
Don't underestimate the bureaucracy, both in cost and time, as a simple example my daughter had to fly 1000 miles to register for tax, as this had to be done in the Provence she was born in not where she lived now or where the factory is based.
Always make sure that the person selling you something owns it, People will offer you a lease on property and only once you've accepted they will then try to lease it from the real owner.
Make sure you stay in control, e.g. In Malaysia 51% of your company will need to be locally owned by an agent, I'e worked for two major UK companies who left Malaysia because they couldn't keep control of IP.
Check if the labour force is available local, e.g, there is no local labour in Malaysia you will end up employing Burmese and Bangladeshis, may as well set up in Bangladesh, same in Indonesia you set up in Jakarta but all your labour are from many miles and hours away. A friend of mine has a specialist car business, his nearest employee lives 8 hours away, so he has to have bunk houses, food etc and it causes huge disruption at holidays.and all sorts of issues around people management that he doesn't really need.
When you look for a partner don't confuse the ability to speak English with intelligence, honesty or integrity, this is such a simple mistake but I've seen loads of examples including one UK PLC who employed a well know crook, against my advice, I stopped consulting for them over it, and it was 3 years latter they phoned me up to apologies, but he talked a good story.
Be aware of corruption, its not as bad as some will say, a smile and a thank you works wonders even at government levels, but if you start paying coffee money you will never stop.
Be aware of gangs, I know of two major oil companies that effectively pay 'protection' money. Delivery companies are particularly prone to this they dived up area geographically and will not cross each others boundaries.
Leases are an issue, you will get an offer of low rent, on short term lease, then when you invest in the property and build a name the Owner will try to increase the rent. I know loads of people this has happens to.
Remember there is no zoning so try to ensure the business near you are compatible, both as a process and image, you don' want a fine clothes factory next to some smelly factory
With your eyes open you will be OK there is nothing that is a show stopper.
In addition to all the excellent points made by Berw and others above, forget any notion of retaining your IP if you're outsourcing to the Far East. They talk a good story but the reality is if your product is any good they'll be supplying you with your product whilst also selling the exact same thing themselves on Alibaba/Ali Express for a fraction of the price and there'll be nothing you can do about it.
It’s my product being faked that is my biggest fear. I have had this happen before with my certification being used.
Genuinely frightening as if you need to use my product you are in serious danger and of course if you think it’s going to work the only way you would find out is when you are probably getting seriously injured or killed.
This is why I’m thinking Eastern Europe to be closer so I can keep a much closer eye. Would that actually help?
Only one part of the whole kit would be made out there. The main unique part of my products is in the materials that I design. Which I would have sent out there. I dont think they would be able to steal them that easily.
Plus I intend to keep the quality control here in the UK so the important parts that make the suit legal will be kept with us.
Or am I being naive?
Genuinely frightening as if you need to use my product you are in serious danger and of course if you think it’s going to work the only way you would find out is when you are probably getting seriously injured or killed.
This is why I’m thinking Eastern Europe to be closer so I can keep a much closer eye. Would that actually help?
Only one part of the whole kit would be made out there. The main unique part of my products is in the materials that I design. Which I would have sent out there. I dont think they would be able to steal them that easily.
Plus I intend to keep the quality control here in the UK so the important parts that make the suit legal will be kept with us.
Or am I being naive?
Not sure if you missed my post, mate number 1 makes Stanley workwear for them, handles the entire process - what you need is what he does.
Here is his reply.
Indeed and not the first time ive read something along these lines. We manufactured in Uk as well as Imported but I stopped in 2013 as the 'risk' was too great and the costs were simply too much.
His pro's and con's list seems at first glance to be within reason. What I mean by that is he has recognised that there has to be a saving but equally he loses a lot of personal control and has to put faith in others to maintain his required standards.
Moving offshore is not as simple as many think - just as trying to bring manufactured product onshore is not either. People know their markets and know how many things operate.
The Safety Side of products (and I'm assuming a lot are clothing here otherwise you wouldn’t have sent me) are mainly manufactured in China still - not least because all the man made fabrics and constructions are made there. China has a big market share and still maintains all this from hard hats, goggles through to chemical gloves and into every day workwear.
Like anything this is a big decision for a company but of costs mean that they're losing out to their competitors then its not so big. As you may know I have curtailed my business here in UK and literally farmed everything off shore aside from Design and Marketing - the key is picking the right partner and one you think can trust to deliver the same product, same specifications.
In short - if you're asking me do I know of any such partners in Asia the answer is Yes I Do and they are people Ive worked with for past 15 years and continue with now.
Here is his reply.
Indeed and not the first time ive read something along these lines. We manufactured in Uk as well as Imported but I stopped in 2013 as the 'risk' was too great and the costs were simply too much.
His pro's and con's list seems at first glance to be within reason. What I mean by that is he has recognised that there has to be a saving but equally he loses a lot of personal control and has to put faith in others to maintain his required standards.
Moving offshore is not as simple as many think - just as trying to bring manufactured product onshore is not either. People know their markets and know how many things operate.
The Safety Side of products (and I'm assuming a lot are clothing here otherwise you wouldn’t have sent me) are mainly manufactured in China still - not least because all the man made fabrics and constructions are made there. China has a big market share and still maintains all this from hard hats, goggles through to chemical gloves and into every day workwear.
Like anything this is a big decision for a company but of costs mean that they're losing out to their competitors then its not so big. As you may know I have curtailed my business here in UK and literally farmed everything off shore aside from Design and Marketing - the key is picking the right partner and one you think can trust to deliver the same product, same specifications.
In short - if you're asking me do I know of any such partners in Asia the answer is Yes I Do and they are people Ive worked with for past 15 years and continue with now.
ntiz said:
Unfortunately I seem to be in a constant race to the bottom on price
Surely then, being the supplier that doesn't outsource to China is your biggest selling point. People only compare on price, when they have nothing else to offer. Be proud its in the UK and shout about it and its benefits as much as you can.
andyb28 said:
ntiz said:
Unfortunately I seem to be in a constant race to the bottom on price
Surely then, being the supplier that doesn't outsource to China is your biggest selling point. People only compare on price, when they have nothing else to offer. Be proud its in the UK and shout about it and its benefits as much as you can.
B2B won't care about where the gear is manufactured and will buy on price.
DSLiverpool said:
Not sure if you missed my post, mate number 1 makes Stanley workwear for them, handles the entire process - what you need is what he does.
Here is his reply.
Indeed and not the first time ive read something along these lines. We manufactured in Uk as well as Imported but I stopped in 2013 as the 'risk' was too great and the costs were simply too much.
His pro's and con's list seems at first glance to be within reason. What I mean by that is he has recognised that there has to be a saving but equally he loses a lot of personal control and has to put faith in others to maintain his required standards.
Moving offshore is not as simple as many think - just as trying to bring manufactured product onshore is not either. People know their markets and know how many things operate.
The Safety Side of products (and I'm assuming a lot are clothing here otherwise you wouldn’t have sent me) are mainly manufactured in China still - not least because all the man made fabrics and constructions are made there. China has a big market share and still maintains all this from hard hats, goggles through to chemical gloves and into every day workwear.
Like anything this is a big decision for a company but of costs mean that they're losing out to their competitors then its not so big. As you may know I have curtailed my business here in UK and literally farmed everything off shore aside from Design and Marketing - the key is picking the right partner and one you think can trust to deliver the same product, same specifications.
In short - if you're asking me do I know of any such partners in Asia the answer is Yes I Do and they are people Ive worked with for past 15 years and continue with now.
Thank you very much for this sounds like I should do it but be careful with it and don’t just jump in. I am currently leaning towards finding a partner and starting with a couple of my less popular lines to just get started without to much pressure on it. That way can work with someone on getting the quality and the process right before having to put all my eggs into the basket.Here is his reply.
Indeed and not the first time ive read something along these lines. We manufactured in Uk as well as Imported but I stopped in 2013 as the 'risk' was too great and the costs were simply too much.
His pro's and con's list seems at first glance to be within reason. What I mean by that is he has recognised that there has to be a saving but equally he loses a lot of personal control and has to put faith in others to maintain his required standards.
Moving offshore is not as simple as many think - just as trying to bring manufactured product onshore is not either. People know their markets and know how many things operate.
The Safety Side of products (and I'm assuming a lot are clothing here otherwise you wouldn’t have sent me) are mainly manufactured in China still - not least because all the man made fabrics and constructions are made there. China has a big market share and still maintains all this from hard hats, goggles through to chemical gloves and into every day workwear.
Like anything this is a big decision for a company but of costs mean that they're losing out to their competitors then its not so big. As you may know I have curtailed my business here in UK and literally farmed everything off shore aside from Design and Marketing - the key is picking the right partner and one you think can trust to deliver the same product, same specifications.
In short - if you're asking me do I know of any such partners in Asia the answer is Yes I Do and they are people Ive worked with for past 15 years and continue with now.
I’m actually very lucky at the moment in that we are probably the biggest in the world for our small niche. The issue is that our product is essentially a safety box ticking exercise were the ship owner wants to tick all the correct boxes with the correct certification for the minimum price. It’s that simple so were it’s made and quality really do t matter all that much. I wish it was different and I could get ahead by innovation but it’s just not the way it is.
We do well at the moment because we can hit the price points that we need to but they are getting lower. Although my turnover is still good profits are going down as costs go up. I’m thinking of doing this now so I don’t wake up in 5 years and realise it’s to late I would rather be ahead of the game.
I am also developing new products to get into other markets that aren’t so price sensitive that will allow us to innovate a bit more and try do something different, hopefully better.
Just a thought to add to the mix.
Can you not use the fact it is all made in your own UK manufacturing facility to XYZ quality standards (best in the world) and offered with 250year warranty (change to suitably market leading period) and remember to tell your customers you are market leading, cutting edge tech on your product.
Then add 7.5% to the retail price.
Trying to be the cheapest is not always the best way to profit. If everyone wanted cheap, Rolls Royce and Bentley would not be doing so well.
But your product must stand up to the claim!
Also worth waiting to see what Brexit does to exchange rates. It is likely to weaken sterling in the short term = lowers your costs on exports.
Worldwide the UK is seen as a quality manufacturer, cash in on that sentiment.
Can you not use the fact it is all made in your own UK manufacturing facility to XYZ quality standards (best in the world) and offered with 250year warranty (change to suitably market leading period) and remember to tell your customers you are market leading, cutting edge tech on your product.
Then add 7.5% to the retail price.
Trying to be the cheapest is not always the best way to profit. If everyone wanted cheap, Rolls Royce and Bentley would not be doing so well.
But your product must stand up to the claim!
Also worth waiting to see what Brexit does to exchange rates. It is likely to weaken sterling in the short term = lowers your costs on exports.
Worldwide the UK is seen as a quality manufacturer, cash in on that sentiment.
Could you play to the strengths of your current employees and manufacture in the Eastern Block? You say the skills already exist over there so there must be a manufacturing base as well?
You may even have an employee who can help you set it up. Or who wants to run such an operation for you.
It may not save you as much as in Asia but it would be closer for problem solving and possibly less chance of endangering your IP.
You may even have an employee who can help you set it up. Or who wants to run such an operation for you.
It may not save you as much as in Asia but it would be closer for problem solving and possibly less chance of endangering your IP.
Others have better experience than me, but my experiences…
IP isn’t looked after greatly in the UK, but it’s a hell of a lot better than most, better than the ex Eastern Bloc and massively better than the Far East. Good Information only goes one way in the Far East, BS comes back the other way.
In a previous role we sent drawings (all copyrighted etc…) with NDAs to the Czech Republic for pricing and you can find them yourself with a quick Google.
Certification usually isn’t worth the paper it’s written on.
Have a read of this
https://www.amazon.co.uk/Mr-China-Tim-Clissold-ebo...
and especially this
https://www.amazon.co.uk/Poorly-Made-China-Insider...
IP isn’t looked after greatly in the UK, but it’s a hell of a lot better than most, better than the ex Eastern Bloc and massively better than the Far East. Good Information only goes one way in the Far East, BS comes back the other way.
In a previous role we sent drawings (all copyrighted etc…) with NDAs to the Czech Republic for pricing and you can find them yourself with a quick Google.
Certification usually isn’t worth the paper it’s written on.
Have a read of this
https://www.amazon.co.uk/Mr-China-Tim-Clissold-ebo...
and especially this
https://www.amazon.co.uk/Poorly-Made-China-Insider...
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