Industrial

Is globalisation over?

23rd July 2021
Alex Lynn

Like most major business sectors, the UK manufacturing industry is still navigating the challenges of COVID-19 and complexities of Brexit. In a staggeringly short period of time, both have fundamentally reshaped the way we do business. The disruption of the last 18 months has exacerbated global supply chain delays across the industry, including the challenges faced by Original Equipment Manufacturers (OEMs) who are beginning to question the risk and reward of globalisation. Cost and delivery are going up. Geopolitics and economic nationalism are at play. And the scales of the global supply chain appear to be tipping uncomfortably out of their favour. 

By John Cameron, Managing Director, CB Technology

However, OEMs are beginning to explore new ways of doing business that are closer to home. Discussions around onshoring and localisation are on the rise and exciting new opportunities lie ahead for local Electronic Manufacturing Services (EMS) companies with the ambition to innovate and compete to meet the changing needs of OEMs. 

So what do these new opportunities look like? What is being done to capitalise on the changing dynamic of the industry? And what does the future look like for UK manufacturing?

Pivoting to the new normal 

Electronics manufacturing in the UK responded strongly to the challenges of COVID-19. Most, if not all, companies in Scotland - where our operation is based - remained open throughout the pandemic by innovating to find safe ways of working. Underlining this success, there were an impressively low number of COVID-related outbreaks connected to the industry.

Since the global manufacturing base started to shift to Asia and Eastern Europe in the early 1990s, UK manufacturing companies have had to develop flexible and responsive business models in order to survive and compete. This mind and skill set came into its own over the last year and enabled many companies to pivot to the ‘new normal’ quickly and seamlessly.

Businesses made key changes to operations and logistics at pace. We’ve seen the rapid reorganisation of factory floors to tackle the challenges posed by ‘social distancing’ and reduce the use of shared surfaces, equipment and product for instance - all whilst simultaneously minimising the impact to customers or costs.

As a result, manufacturers are more flexible than ever, and readily prepared to adapt to new or changing complexities posed by the lasting legacy of 2020, such as growing concerns related to the stability and sustainability of the global supply chain.

The global supply chain

It has become increasingly clear during the pandemic and post-Brexit fallout that manufacturers need to create a focused plan that accounts for extended material lead times, securing critical and single-sourced parts and building strategic buffer stocks.

Like most EMS companies, at CB Technology we pride ourselves on effectively being an extension of our customer’s organisation. As such, EMS companies play a critical role in supporting customers through challenging supply chain situations, with the ultimate ambition of ensuring problems are dealt with before customers are even aware. 

Taking a partnership approach enables manufacturers to prepare the groundwork well in advance of potential difficulties. Early-stage proactive engagement can help minimise, or even eliminate, many of the challenges that will occur in problematic supply chain situations.

For example, working closely with customers at the initial product design stage can ensure the use of readily available components, rather than unique or complex single sourced items; we can support the identification of approved alternatives thereby alleviating the pressure caused by situations such as the current shortage of specialist components.

The value of research, market monitoring and strong supplier relationships has never been more important in order to identify potential issues as early as possible. Proactive engagement both with customers and suppliers has been key to ensuring that manufacturers are able to respond quickly and communicate clearly with customers in the current operating climate. 

As fresh COVID outbreaks in Asia and a global imbalance of the vaccine rollout continue to disrupt the global supply chain, trade-deals with some of our closest neighbours also remain unsigned. Manufacturers now need to extend their conversations with suppliers and customers to take further proactive steps with a view that the ‘new normal’ will remain for at least the next 12 months - if not longer still.

Onshoring and localisation

The weakening of the global supply chain has the potential to create opportunities for progressive EMS companies. OEMs are beginning to ask themselves whether they should be sourcing products closer to home and, more importantly, whether this can be done without compromising on price, as well as quality and delivery.

For manufacturers, discussions about onshoring and localisation have been one of the silver linings of the last 18 months. Support for local business is on the rise and we’ve seen a large shift in consumer behaviour during the pandemic and the UK’s exit from the EU. 

The ethical shopper is now mainstream, influencing how businesses choose to design and make their products. It’s clear that new customers would rather ‘keep things closer to home’ and this is increasing opportunities for companies operating within the UK manufacturing sphere.

By working with local partners, businesses can appeal to considered shoppers while having confidence that they are supporting the local economy and taking pride in producing quality, British-made products.

Whilst the age of the global supply chain is clearly not over, OEMs have learned it can be quicker and smoother to use local manufacturers in the current circumstances. It’s now up to EMS companies to find creative solutions to tackle these macro-level challenges and position themselves to support the changing needs of OEMs.

With benefits such as increased flexibility, reduced risk and significantly shorter delivery times, local EMS companies are well placed not only to meet growing demand but to secure long-term custom that extends beyond the immediate impact of the pandemic and Brexit. 

Progressive companies will already be positioning themselves to demonstrate to OEMs that they have the required capacity, capability, cost competitiveness and structure to support their requirements. The close alignment of cultures, geography and goals should enable local partnerships between OEMs and EMS companies to flourish.

Addressing these immediate business challenges and implementing a roadmap focused on the creation of a sustainable, collaborative relationship will be key to success. To be sustainable, localisation needs to be looked at as a long term partnership and not just a band aid for short term problems.

Looking to the future

The manufacturing sector remains a vital part of the UK’s economy and will play a key role in its recovery following the pandemic. The country is already in a strong position, having made significant investment in the sector, and we should expect to see this continue towards the end of the decade.

The UK is also home to a number of vibrant sectors which will drive economic growth and require the support of a strong manufacturing sector over the coming years. 

The space industry is seeing unprecedented growth and Scotland, in particular, is the headquarters for over 80 of the leading space companies. Rising faster than anywhere else in the UK, the value of this sector in Scotland is expected to be more than £4 billion by 2030.

The Censis Innovation Centre for Sensing, Imaging and IoT technologies, located at Glasgow University, has stimulated a wave of startups and technology breakthroughs in this sector, and CB Technology is very pleased to have partnered with a number of companies that have successfully brought products to market. The circular nature of these developments, combined with innovation hubs at a number of universities, will ensure that this sector will continue to flourish in the coming years across the whole of the UK.

The use of sensing technology in condition monitoring and industrial control is a growth area, as the technology becomes more accurate and robust and as companies are increasingly conscious of removing personnel from dangerous roles that can otherwise be performed by technology. From heavy industry such as petrochemical plants to offshore energy generation, and transport systems to building management, ruggedised sensing and transmission technology can highlight potential system overload or failure, reducing costs and safeguarding engineers. 

Progressive EMS companies are well placed to support thriving industries like these and others through early-stage support and alignment and proactive engagement which will ultimately lead to long-term success and security, post-pandemic.

As the industry looks to bounce back swiftly from the events of the last 18 months, now is the time for manufacturers to capitalise on the changing dynamics of globalisation, create new industry models for working that have British manufacturing at their core, and seize with both hands the opportunities that the ever-changing world presents.

Featured products

Product Spotlight

Upcoming Events

View all events
Newsletter
Latest global electronics news
© Copyright 2021 Electronic Specifier