Thursday 17th Aug 2017 - Logistics & Supply Chain

The next best place to source components

Is the Far East still the best place to source components? It’s the commonly accepted wisdom, but it is now being challenged in the UK by the Society of Motor Manufacturers and Traders. It argues that major automotive buyers are creating significant opportunities for the UK supply chain.

The SMMT points out that investments of more than £4.5 billion in UK automotive facilities over the past 18 months are creating growth opportunities for component companies across the country.

Chief executive Paul Everitt says: “Leveraging investment through the supply chain is central to guaranteeing further investment in skills, R&D and capital equipment required to sustain economic recovery and attract long-term inward investment in the UK.”

The SMMT reckons the UK supply chain has the capability to provide more than 80 per cent of all component types required for local vehicle assembly so there is plenty of scope for expansion as vehicle manufacturers currently purchase 60-75 per cent of their national production value within the UK.

Certainly, events seem to be on the side of European suppliers. There is a clear trend in the motor industry to manufacture closer to the customer.

Long supply chains have appeared vulnerable not only to natural disasters but also to fluctuations in the cost of transport.

Container rates from the Far East have been rising from a low that was unsustainable for the shipping lines last year. And while no-one is surprised about rise in rates, there is concern at the volatility in the market.

So are we about to witness a significant restructuring of manufacturing supply chains?

Perhaps I can refer you to a quote from former Chinese communist leader Chou En Lai. In 1972, he was asked his opinion of the historical impact of the French Revolution of 1789. He reputedly replied: “It’s too soon to say.”

Do you agree?  Tell us at the discussion group on Linked In.

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