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The number of companies re-shoring and near-shoring in the UK continues to rise according to new research
London, 15th October 2014 – The number of companies re-shoring and near-shoring in the UK continues to rise according to new research published by JLL.
Commenting on the drift, Tom Carroll, director in JLL's EMEA Corporate Research team who is speaking at MIPIM UK today, said: "Recent changes in the global economic and business landscape have resulted in an apparent reversal of the offshoring location trend with a number of companies electing to move operations back to the UK. This trend is not only confined to manufacturing. The move to re-shoring and nearshoring is also impacting the services sector with a range of financial and wider professional services companies such as law firms exploring ways to expand their enterprise footprint in lower-cost UK locations. The trend is not simply preserved for multinational companies either. Many mid-market firms are in the process of scrutinising their portfolios and looking for low-cost or nearshore alternatives."
JLL's research reveals that the UK's return to favour is not exclusively driven by concerns about offshore locations but a combination of factors. For several years, advanced manufacturing and R&D clusters have flourished around UK university hubs such as Oxford, Cambridge and Manchester. The availability of talent is another influence. Additionally, the UK's high level of transparency, its increasingly competitive corporate tax regime and business-friendly environment are combined forces that continue to drive growth. Government incentives, more widely available in Scotland, Wales and Northern Ireland also add impetus to encouraging corporate investment back into the UK.
Shelley Frost, director in JLL's UK Corporate Solutions team, added: "The process by which companies analyse and optimise the deployment and configuration of their global operations to maximise revenue, margin and efficiency opportunities – Enterprise Footprint Optimisation (EFO) – demands a subtle balancing act. It is one that should consider a mix of on-shore, near-shore, offshore and outsourced functions."
Shelley Frost continued: "On the demand side, various dynamics dictate good EFO practice. These range from identifying existing geographies of demand for products and services, alongside future geographies of growth, to harnessing opportunities to improve margin through optimising tax structure, rebalancing supply chains and recalibrating structural costs. Driving through efficiency and innovation targets, by investing in new technologies, right-sizing facilities, reducing lead times and maintaining lean inventory are also key considerations. A deep understanding of supply-side factors is equally vital, because a successful 'shoring' strategy hinges on the availability of skilled labour."
Tom Carroll concluded: "It is doubtful that we have seen the end of the offshoring era however, what is clear is that a growing cluster of companies are reassessing their enterprise footprints. While this balance of nearshore and offshore operations will remain fluid – the pressure to deliver greater productivity and efficiency from enterprise footprints will only increase."
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