Can volume come back to the UK?
A manufacturer has has made the case for attracting more high-volume production back to the UK. If this happens there could be implications for the electronic supply chain in the UK.
“There has long been a perceived wisdom that you must manufacturer in volume in other parts of the world,” Tony McFadden, director and co-owner of United EMS told Electronics Weekly.
“In the last two years that has started to change,” said McFadden.
United EMS has just won a £3m contract in competition with Chinese manufacturers.
“I believe there is an opportunity, a gap in the market to work with those people who have had headaches manufacturing in the Far East,” said McFadden.
It is not a quality which is the issue, but the basic problems of logistics and communications when getting your product made on the other side of the world.
“Quality is not the issue, quality is a given these days. It is about logistics and communications,” said McFadden.
The important point, says McFadden, is this is not just about creating a manufacturing operation with the right production technology and production efficiencies. It is about making the whole supply chain efficient enough to compete with China.
“We are all stakeholders in the supply chain,” said McFadden. “For example, components are cheaper in the Far East so we must work with the supply chain to ensure they have the right cost model too,” said McFadden.
This is where the manufacturer’s partnership with distributor Anglia Components became important.
The contract will be supported by Anglia which has signed a component supply agreement valued at more than £1m with United EMS.
McFadden had to be certain he could get the necessary components, and at the right price.
“We have to look at the total cost of ownership,” said McFadden.
“A lot of effort has gone into understanding the local supply chain, the availability and cost of parts,” said John Bowman at Anglia.
This is not just implementing a few minor changes to the price lists. “It has resulted in a rethink of how the local supply chain operates,” said Bowman.
“Working in partnership with a UK distributor, we have managed to beat Asian competition and bring a major manufacturing contract back to the UK,” said McFadden.
It was a similar story at LPRS, the supplier of short-range radio devices, which also recognised the importance of creating a UK-based supply chain to allow its locally manufactured products competitive in export markets.
“We had to find a more efficient way to run our business,” said John Sharples, managing director of LPRS.
Contract electronics manufacturers in Asia, Eastern Europe and the UK were evaluated. Sharples was impressed with the enthusiasm and range of the UK-based manufacturers available and as a result he selected Chippenham-based Danlers to manufacture LPRS’s easyRadio products.
LPRS then signed up Transonics to provide full procurement and kitting services. LPRS already uses Lewmax, a division of Transonics, for programming PICs in its radio modules.
Back at United EMS, McFadden also realised when he created the manufacturing business last year that there had to be a different approach to costs and supply chain than was typical in a UK-based manufacturing business.
“Companies want to listen, but you need the right cost model,” said McFadden. “We needed to be a manufacturer with lower cost overheads.”
McFadden says he was fortunate because he could build a manufacturing business from the ground up, without having to absorb legacy equipment and product practices.
“The business was designed to have lower overhead cost model from day one,” said McFadden.
This meant investment in production equipment and obtaining the necessary certifications. Inevitably it also meant having more cost-effective staffing levels.
“We knew we had to take the fat out of the business to make it competitive,” said McFadden. “This would give us our best chance.”
“Anglia created a supply chain solution that allowed us both to win,” McFadden.
“They recognised we are all stakeholders in the UK, and we believe it can work,” said McFadden.Tags: business, China, manufacturing