UK Manufacturing: A Viable Alternative to North America and China

Nothing stays the same forever, but everything keeps on moving. This necessitates adaptable processes and planning for possible changes that could shake up business practices.

Regarding global manufacturing, China and the United States rank at the top. However, with shifting geopolitics and new tariffs being levied by the US, China, Canada, and Mexico, manufacturers are accruing more costs. In the face of this, some companies are beginning to look for alternative manufacturing locations.

The UK has recently invested billions of dollars in domestic research, development, and manufacturing. The result? Over half of UK manufacturers are reshoring. Additionally, there has been a global rise in nearshoring or friendshoring, where companies shift manufacturing operations domestically or to countries with good political relationships.

Two major factors that lead companies to move manufacturing are cost and reliability. Tariffs, which raise prices throughout the supply chain, influence both of these factors.

Strengths of UK Manufacturing

Tariffs aren’t the only reason companies are choosing to manufacture in the UK. Beyond government investment and incentives, the UK is also a leader in innovation and green manufacturing.

Quality-Driven Standards

Products are manufactured in the UK in accordance with regulatory requirements and quality control procedures. Although ensuring that all standards are met can be tedious, they ultimately safeguard against faulty products and create items that consumers can trust.

The UK’s commitment to high production standards is particularly valuable in industries such as medical technology, where precision and safety are non-negotiable. Companies that manufacture in the UK benefit from this reputation for quality, making their products more attractive in both domestic and international markets.

Innovative Technology

UK companies are embracing smart manufacturing. 88% of UK companies have invested in or plan to invest in AI. Industry 4.0 technology saves time and money in design and manufacturing. These systems are more efficient and predictive, and can use data to optimise processes from supply chain to production.

One of the biggest advantages of AI and automation is predictive maintenance. Smart systems analyse real-time data to anticipate failures before they happen. Digital twins, which are virtual replicas of physical production lines, allow manufacturers to test processes before implementing them on the factory floor. This reduces waste, saves time, and helps companies refine products and operations.

Financial Incentives and Manufacturing for the Future

The UK has committed to reaching net zero by 2050. The Build Back Greener plan focuses on how the UK can reduce emissions, with a focus on investing in offshore wind. Other government programs, including tax reliefs for energy-efficient businesses, make sustainability beneficial across sectors. As the world progresses towards a more sustainable future, companies in the UK will be setting the pace.

The UK government’s interest in advancing manufacturing goes beyond reducing emissions. UK Research and Innovation funds researchers and businesses. Among those receiving funding are innovation hubs, which give small- and medium-size businesses access to facilities and expertise in developing new technology.

Innovation hubs don’t only receive funding and support from the government. Technology companies sponsor these organisations as well. Pivot and our two UK-based companies, Wideblue and A2E, are sponsors of The Beyond and Filament STAC, two innovation hubs located in Glasgow.

Nearshoring Benefits

Tariffs, the hot topic of early 2025, are starting discussions around nearshoring for some UK companies. However, other benefits have caused UK businesses to nearshore or reshore over the past few years.

Nearshoring reduces dependence on long supply chains that are at greater risk for disruptions. This also creates shorter lead times so that products are manufactured faster and in the hands of consumers sooner. Additionally, bringing operations closer together saves on transportation costs and reduces emissions, helping companies improve their environmental impact.

Manufacturing in the UK allows businesses to more quickly respond to supply chain disruptions. When components are sourced domestically or from nearby countries, companies can react faster to changes in demand and avoid shipping delays and risks that could stem from geopolitical tension. Additionally, UK-based production ensures greater oversight and transparency, reducing the chances of quality control issues or ethical concerns.

Cost Competitiveness

When UK companies started offshoring in the 1970s, the primary motivator was lower labour costs abroad. However, with automation taking over small repetitive tasks, the gap between offshore and domestic labour costs is closing. Combined with added costs from tariffs and transportation as well as tax credits for innovation businesses in the UK, many companies are re-evaluating their supply chains and finding that reshoring production can be more cost-effective, efficient, and resilient than their current operations.

Ethical Considerations

The shift towards more sustainable practices indicates that consumers increasingly care about the process of creating their products. Another facet of production that consumers care about is ethics. Given the option between an ethically produced product and one made under lower standards, most consumers would pay slightly more for the ethical option. Ethical production includes sourcing, labour standards, and fair wages.

In the UK, consumers will specifically pay more for products made in the UK. Shoppers view UK-made products as more ethical since they know the country has high labour standards and pays workers fairly. Environmentally conscious shoppers also value products made in the UK because there are lower emissions in the production process than products made abroad.

The Future of UK Manufacturing

As public attitudes shift to be more environmentally and ethically conscious, companies should adjust their operations to align with the values of their customers. Reshoring to the UK opens the door for businesses to make sustainable changes while also saving money and time.

The UK’s status as an Industry 4.0 leader makes it an opportune product development location for tech-sector businesses. With innovation hubs and government incentives for research and development, the UK is teeming with opportunities for smart product ideation and development.

Pivot UK is the European headquarters for Pivot International. With over 50 years of experience, our teams are experts in design, manufacturing, and bringing products to market. Our agile global supply chain team uses analytics-based decision support to monitor networks and make changes before problems occur. Our UK-based companies, A2E and Wideblue, are home to award-winning design teams that can work with you to develop your next product. Contact us today to learn more.