The impact of reshoring

The Jaguar brand has been one of the most recognised British institutions since the advent of motor vehicles - so it's only fitting that Jaguar Land Rover's expansion within the West Midlands over the last four years is one of the most visible cases of eschewing export and keeping our business British.

Given the recent research conducted by Warwick Business School and GE Capital, it looks like many other UK companies are looking to follow suit. According to the report, a quarter of mid-market firms are considering reshoring some or all of their internationally outsourced business activity back to Britain, something that could create 378,000 jobs and £83bn in revenue over the next three years.

At first glance, this is tremendously good news - but there's another side to the situation that isn't currently receiving much attention. The vast majority of work that will return to Britain is that which has been being outsourced to the Eurozone or broader EMEA. There will be some that comes back from the Asia-Pacific region but in a much smaller quantity.

Over the past few years, due to a shortfall of home grown talent, Britain has become increasingly dependent on hiring European nationals, who were happy to relocate to the UK for financial rewards greater than could be achieved in their home country.

Now, rates have equalised across Europe - and the rising cost of staff in European Countries is, no doubt, what has led to increased cost of outsourcing which has, in turn, prompted many British companies to reshore their work. The irony is that the equalisation of rates in Europe that has led to work coming back to the UK could actually leave us with too few workers to actually complete the work.

At best, it is going to be an awkward balancing act and, at worst, it could be more of a curse than a blessing. After all, if we've been struggling to fill our open vacancies over the last few years to the point where we've had to rely heavily on foreign workers, how are we going to manage to fill the more than 125,000 jobs that will be created in each of the next three years?

Naturally, some of them will be roles which can be fulfilled by lesser skilled workers or apprentices, but even then, the sheer quantity will present an issue, especially if the increase in wages abroad lead to fewer EU workers moving to the UK. Given that English is the language of business, there will always be something of an incentive for people in less business-centric countries to move to the UK but we can't rely solely on that.

From an engineering perspective - because a substantial amount of these new jobs are likely to be within manufacturing - we need to encourage the next generation to consider the promise of a career within the industry. Even then, this may not be reactive enough because we can't expect people to come through the full education system including University in the timescales required to satisfy the upcoming need.

We're going to have to rely on employers to consider other method which focus primarily on training, including apprenticeships which will allow vocational training on the job, accelerating the process and giving us a chance at potentially keeping up with the impending increase in national workload.

Otherwise the only way of getting the work done will be to increase rates in order to make the work more appealing and, again, attract more foreign workers - which will substantially eat into the project revenue gains and get us back to square one where it's actually more cost effective to outsource the work again.

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