Offshoring is an emotive subject that is guaranteed to rile trade unionists and grab headlines. Despite union claims that it has to stop, and some very vocal campaigns to that effect, a survey by the Confederation of British Industry (CBI) found that 51 per cent of businesses says pressure to offshore has increased over the past two years, with 21 per cent describing these pressures as ‘very great’.
A third says they have already taken some activities overseas, and almost one in four are considering doing so in the future.
Manufacturing is where the real movement is. The CBI found that almost half of the companies that had relocated operations overseas had offshored manufacturing. Of those that have yet to begin offshoring, 49 per cent are considering sending manufacturing abroad.
CBI director-general Digby Jones puts the situation into stark perspective. “Offshoring is now part-and-parcel of doing business in the global economy,” he says. “Make no mistake; this is a survival issue.
“Anyone who believes that firms have a great deal of choice is naïve,” he adds. “Companies know if they don’t do it, somebody else will. If competitors act and they don’t respond, they may put their business at risk.”
Martin Temple, director general of the EEF – the manufacturing employers’ organisation – says that it is true many are moving away from traditional definitions of what constitutes a ‘manufacturing’ company, and also from a purely nationalistic attitude to location.
“Companies must consider where manufacturing and other functions should be located to achieve maximum global advantage and also benefit from rapidly growing new markets,” he says.
Moreover, if you do choose to take this path, the Government is right behind you.
In a recent consultation on offshoring, Patricia Hewitt, secretary of state for trade and industry, says the Government would fight the protectionism mooted by trade unionists.
“Attempting to prevent offshoring by putting up trade barriers would be costly and, in the long run, ineffective,” she says. “It would risk forcing companies to locate completely out of the UK, or would deter future inward investment, which would not be in our long-term interest.”
There are unquestionable benefits to offshoring. According to the CBI survey, these include improved processes, fast adaption and learning by overseas staff, and the avoidance