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Only Connect: On Cables returning to the UK
Welcome to another post in the series by Nick Locke, of Nicab Ltd, who has over 15 years experience in the electronics manufacturing industry specialising in interconnection cable assembly.
In the last 12 months we have seen a massive amount of cable assemblies and electronics being brought back to the UK for manufacture. This great news, so let’s look at the details of the way this shift is happening specifically for cable assemblies.
There are 5 main reasons for the re-partition of assembly work and they are:
1: Cost of transport
The rising costs of transportation are starting to have a massive effect on the overall cost of our goods. For example, for many heavy goods – such as power cables – the cost of transporting can be as much as 30-50% of the overall cost of individual shipments. These costs are set to rise.
2: Cost of labour
It is a well known fact that labour costs in China have risen and continue to do so due to the rise in wages paid to factory workers, which they deserve, and as their economy develops more and more workers will be able to have more choice about what companies they work for and what wages to accept.
We know that the labour market in China is very fluid and workers have begun to move around for the best paying jobs. This is starting to cause problems for factory owners as they struggle to retain highly skilled workers.
3: Time to deliver
Typical lead-times are 10-16 weeks and in today’s need for speed markets we just can’t wait that long. The UK’s factories have understood the challenge of quick delivery and risen to that challenge. With the adoption of assembly automation high volume with quick turnaround is a reality.
To be fair to China they are not always as bad as they can be made out to be. However, the biggest issue with quality is what to do when there is a problem. A good example is having waited 12 weeks for your parts to arrive you discover a problem how do you resolve this as by now you urgently need the parts?
The sad reality is that you have to ship the parts back to the factory and wait for them to make the necessary repairs and return to you which can take weeks and in the meantime you could loose future orders or have to resort to getting a UK factory to provide products on a quick turn around to get you out of a hole making you wish you had just given the order to them in the first place!
This has become a very common situation and where the total cost of production makes the UK look very attractive.
5: Shifts in China Focus
China is starting to focus on higher end manufacturing to service their own rapidly growing middle classes. In addition to this we will see a rise in Chinas own branded products entering western markets. An interesting example of China’s up scaling is the fact that they import more LED’s from Germany than they export back.
There will always be a place for low-cost manufacturing. However when the total cost of purchase is considered the UK can make a very attractive proposal, which is simple. Work with your suppliers in the UK and receive a great service and on-time deliveries at the price agreed with little stress.
Take a look at this interesting video from the Wall Street Journal which provides an interesting insight to this.
Nick Locke, Nicab LtdTags: Only Connect