Why considering where you manufacture is vital for your long-term sustainability goals.
Currently, the manufacturing and construction sector is the third highest source of greenhouse gas emissions. (Global GHG emission shares by sector | Statista)
Whilst manufacturing goods overseas is often seen as a less expensive approach, when taking into consideration: quality control, reducing carbon emissions, and simplifying your supply chain, there’s a whole host of factors to consider when deciding where to manufacture your goods and products.
The differences of nearshoring and reshoring
Following the Covid-19 pandemic, the surge in demand for goods, as well as the increase in delays, put a huge pressure on manufacturers across the globe.
As a result, many businesses adopted different practices to optimise efficiencies, including nearshoring and reshoring.
But what’s the difference between the two?
Nearshoring is when you partner with suppliers, manufacturers, and other necessary entities involved within a supply chain which are located in a country which is near to your business. For example, a US based company might practice nearshoring by working with manufacturers in Mexico instead of China.
Reshoring is when the manufacturing and production of goods is being done in the region or country which your business operates in.
For many, nearshoring provides a host of financial benefits. From reduced lead times, quicker transit times, increased flexibility and minimising risks associated with global disruptions.
However, nearshoring goes beyond economical benefits, in fact, both nearshoring and reshoring show a shift towards a more sustainable mindset when it comes to manufacturing practices.
Localising production vastly reduces the amount of carbon emissions which would have been produced through long-haul transportation.
Additionally, localised facilities are typically more energy-efficient and can help companies reduce their waste through sourcing materials locally.
The impact overseas manufacturing has on your carbon footprint
If goods are manufactured outside of where a business operates, regardless of the location, transport and distribution will most likely be their highest contributor to annual carbon emissions.
Logistics Business found that: “the average small to medium sized company in the UK generates around 15 tonnes of carbon emissions annually, making up 44% of the UK’s non-household emissions.” (UK Manufacturing – Maximize Efficiency & Reduce Carbon (logisticsbusiness.com))
Increased costs of labour, energy and materials are all factors which persuade companies to manufacture offshore, in countries like China.
According to Ignitec, “over 80% of the world’s trade is done by shipping” (The cost-benefit of manufacturing in the UK (ignitec.com)) and the repercussions this has on the environment is evident.
Even though moving goods by sea freight is less harmful to the environment compared to air and road freight, localising your production leads to reduced emissions and carbon neutrality.
Recent legislation like Scope 3 Reporting and the Carbon Border Adjustment Mechanism (CBAM) has increased the need for sustainability practices within businesses, and in particular, certain companies have been re-evaluating their supply chains to become more environmentally friendly.
This also echoes the rise of end consumers who are willing to invest in sustainable products, and purchase from sustainable and ethical businesses; all of which can be traced from your supply chain.
Benefits of UK manufacturing
Since the industrial revolution, the UK has been renowned for its craftsmanship, in particular, its expertise in design, engineering, and high-precision manufacturing processes.
This year, for the first time, the UK has fallen out of the top 10 global manufacturing nations. Despite this, it remains an essential foundation of the UK economy.
Make UK found that in 2024, manufacturing contributed “£217 billion to the UK economy” and saw “an impressive £38.8 billion investment increase compared to 2023” (UK Manufacturing: The Facts 2024 – by Make UK (substack.com)).
The vast range of suppliers within the UK means it’s easy to find a range of materials within a short time frame. Additionally, with plenty of suppliers already established, you don’t need the extra strain of creating new relationships with foreign companies, which can be both costly in terms of time and money.
One of the main benefits which manufacturing locally brings is shorter lead times. The geographic proximity between suppliers and customers can lead to reduced shipping costs and faster delivery times, as opposed to manufacturing goods overseas, which in turn, can help result in a lower carbon footprint.
Besides the financial benefits manufacturing in the UK provides, it can also improve customer satisfaction through guaranteeing goods arrive on time, without additional delays or unexpected issues.
Another benefit UK manufacturing has is increased visibility on the quality of goods throughout the entire supply chain.
Since Brexit and the Covid-19 pandemic, supply chains have seen an array of disruptions, including the drastic increase of prices for: transport, raw materials, and energy. As a whole, global markets are viewed as being risky, due to the lack of visibility across aspects like change in prices and transport costs.
Make UK discovered that “over two-fifths of manufacturers said the proportion of their suppliers based in the UK has increased in the past two years” (Operating without Borders – Building Global Resilient Supply Chains | Make UK) which shows how increasing your network of suppliers can help minimise risk, and reduce the reliance on a smaller supply pool.
How the Sustainable Freight Network can help your business
Our Sustainable Freight Network was founded to help break down the jargon that surrounds sustainability within logistics.
From helping with guidance on reporting emissions, to taking a deep dive into your supply chain to unlock the hidden opportunities to reduce your environmental footprint – our team of Sustainability Specialists are here to guide you through all the complexities.
Depending on whether you manufacture in the UK or overseas, what is clear is that often, the simpler a supply chain is, the more reliable manufacturing outcomes are.
Manufacturing in the UK reduces a business’s environmental impact and carbon footprint, simplifies supply chains, and boosts the local economy.
Whereas increasing costs of labour, goods, and energy makes manufacturing overseas a cost-effective method for many businesses.
Whilst the true cost effectiveness of manufacturing abroad can be disputed, for many it’ll depend on the type of goods and services a business is selling, and using a combination of both local and overseas suppliers within different stages of product development to get the most cost-effective outcome.
Navigating sustainability in logistics doesn’t have to be a headache, that’s what we’re here for!
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