Britain has become increasingly dependent on imports of industrial products from low-cost Asian countries in the past four years, despite supply chain disruptions caused by the pandemic, a new study finds.
This is one of the findings of the Production Technology Center inaugural UK Reshoring Index, which analyzes UK manufacturing output and import data from 14 low-cost Asian countries (LCCs) to see if the UK is pulling production back from Asia.
The index’s industrial import ratio (MIR) – imports of manufactured goods from Asian LCCs as a percentage of UK industry’s gross output – reached 61 percent in the third quarter of 2021, up from 43 percent in the first. quarter of 2018. A higher percentage indicates a lower level of reinsertion.
According to the MTC, this increase in the MIR marks the continuation of a decades-long trend, as globalization and the free movement of goods have led British companies to relocate production abroad and consumers become more dependent on the production of goods produced. in low-cost countries.
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The increase in the MIR is characterized by two main trends, the first of which is that UK manufacturing output has yet to recover from 2018 levels. In the third quarter of 2021, the most recent period with data available, the figure was three percent lower than in the first quarter of 2018.
Growth was mainly hampered by COVID-19. Lockdown measures forced factories across the country to close in March 2020, placing hundreds of thousands of workers on leave – in April 2020 the number stood at 911,000. As a result, manufacturing output fell by a third in the first two quarters of 2020.
The output suffered again during subsequent COVID outbreaks as new variants emerged. During the spread of the Alpha variant towards the end of 2020, manufacturing companies reported a high rate of employee absence. Production fell more than five percent in the first quarter of 2021, the only quarterly decline since the start of the pandemic.
This led to the UK becoming increasingly dependent on imports to offset this decline in production and the index shows the MIR has risen from 44 percent to 64 percent over the course of 2020.
Second, imports from Asia were resilient. From Q1 2018 to Q3 2021, the total volume of imports from LCCs increased by 39 percent. Chinese imports grew 67 percent and the trend continued through the pandemic, despite problems in the global supply chain.
While imports from Asian countries temporarily declined during the first year of the pandemic, volumes recovered faster than UK production. Reasons for this include the pandemic that started earlier in Asia, the existing resilience of past pandemics such as SARS and stricter measures that have prevented successive COVID outbreaks. As a result, Asian countries were able to meet the increased demand when the UK needed it.
dr. Clive Hickman OBE, chief executive of the Manufacturing Technology Center (MTC) and chair of the Industrial Policy Research Center (IPRC), said in a statement: “Our analysis shows that the UK is still over-reliant on industrial imports from Asia. low-cost countries.We need to lead a renaissance in UK manufacturing with a renewed focus on jobs, skills and resilience to encourage industry withdrawal.These efforts begin with a national manufacturing strategy to ensure the sector is future-proof for decades to come .
“By focusing on building stronger links between academia and industry, fostering decentralized powers to create regional industrial strategies and providing a dedicated funding pool for Net Zero production, the UK’s industrial capabilities will increase , improve productivity and create thousands of green jobs for the future.”
To determine the British industry’s import ratio, MTC divided the total GBP value of manufactured goods imports from a basket of low-cost countries by the British industry’s gross output in GBP. MTC calculated the value of imported manufactured goods from 14 traditional offshore trading partners, namely China, Taiwan, Malaysia, India, Vietnam, Thailand, Indonesia, Singapore, Philippines, Bangladesh, Pakistan, Hong Kong, Sri Lanka and Cambodia.