To the casual observer it may appear that Electronic Systems manufacturing is something that Britain did in the 1950s and 1960s; but since then, has moved inexorably to lower-cost economies leaving a post-industrial UK manufacturing with very little activity. Nothing could be further from the truth!

Though it has undergone revolution in scope and shape under the influences of globalisation, the UK’s Electronic Systems manufacturers continue to thrive, employing around 200,000 UK people in around 5,000 operations today.

UK Electronic Systems manufacturers are significant exporters, with the sample of companies surveyed in the Manufacturing Workstream of ESCO aggregating 72% of output exported and many companies exporting above 90% of output.

Whilst off-shoring of UK manufacture has been a feature of recent years, 25% of those who had off-shored some or all of their production have subsequently re-shored manufacturing to the UK. And 85% of companies declared an intention to increase the number of products manufactured here.

However, in the face of competition from other ambitious nations we need to continually review and reinforce UK advantages.

R&D investment is vital to manufacturing operations – almost all companies interviewed had R&D operations in the UK associated with UK manufacturing. More than half also have associated R&D operations in the UK for products manufactured outside the UK.

The physical separation of design and manufacturing has proven particularly problematic in some areas, and has been a key driver of the emerging trend to re-shoring manufacturing to the UK.

Costs of Doing Business in the UK

Many of UK Electronic Systems manufacturers consider that there is a cost penalty for manufacturing in the UK. Companies making highly differentiated or high added-value products find locating their manufacturing in the UK of great technical benefit which can offset the increased cost – but only just!

The result of a higher cost base is inevitably less manufacturing here, lower levels of investment for the long term and ultimately less employment.

“We all enjoy a good standard of living in the UK but the Government has a key responsibility to ensure input costs of UK manufacturing enterprises remain at least competitive with other developed nations.” Joe Willson, Emerson UK

Manufacturing Summary

  • Manufacturing is healthy in the UK Electronic Systems sector, where it adds high value to the product, maintains quality, secures brand value, maintains control and improves flexibility.
  • Many who have previously off-shored manufacturing have now brought it back to the UK, citing quality and flexibility issues as hidden costs of off-shoring.
  • Cost of manufacture in the UK is a critical issue – utility costs are more expensive here, with component costs and labour costs also seen as key drivers.
  • UK Supply Chains are weak due to many years of off-shoring and the lack of a strategic approach to procurement by UK companies.