Around the world companies are reshoring at a record rate. The carbon emissions once considered the cost of globalism are less tolerated. Rising import tariffs and improved manufacturing technology is making on shore production more attractive than ever.
For many the rewards of reshoring outweigh the risks. And let’s be clear there are risks to reshoring, it means setting up new supply chains, working with new partners and adjusting your budget. But, by developing an onshore industry we can mitigate these risks.
Whether it’s for the environmental or commercial benefits of reshoring you should really consider it for your business. If it’s something that you’re on the fence about then just have a look at some of the benefits below.
Reshoring Creates Less Carbon Emissions
By reshoring industry companies are able to take a greater role in regulating the carbon cost of production. Combined with tighter regulations on carbon emissions than some of the current major production countries and carbon emissions plummet.
In the UK we are in a good place to take advantage of green energy for production- we can definitely get better too. That means we can reduce a lot of the carbon emissions by limiting carbon cost to transport and materials. The more we focus on green energy over fossil fuels in production facilities the more this effect is felt.
As we’ve mentioned before, the shipping industry is one of the largest contributors to global carbon emissions. By reshoring electric bike production to the UK we are able to remove ourselves from this pollution. What does still need to be shipped in- specific brands of componentry for example- carries a much lower carbon cost in shipping. And can be shipped much more effectively.
Reshoring Creates More Reliable Supply Lines
Reshoring creates much more reliable and robust supply lines than offshore production does. The reason is pretty simple, reshoring streamlines supply lines. The less moving parts in a system the less chance there is for something to go wrong.
While dealing with offshore production you generally need to deal with high MOQs, manufacturing companies, shipping companies, ports, importation fees, etc. Delays or problems anywhere along this chain mean that your goods wont get to you when you want them. You will be dealing with interrupted cashflow while spending more on high MOQ orders.
Take port strikes as an example. Beyond just stopping goods from moving through one port they increase the amount of goods going to other ports and slow them down. While this is happening electric bikes from China will have trouble getting into the country and onto shelves. Problems like this can hit anytime, and there is nothing the industry can do about it. Worker strikes, problematic weather, customs delays, factory problems. All of this makes offshore supply lines less stable.
And yes, things can go wrong with domestic supply lines, a problem in the factory could mean your bikes aren’t made on time maybe. But you won’t need to deal with customs delays or port strikes. In fact you may not even have to deal with separate shipping companies. Manufacturers may be able to offer inhouse shipping as part of their production contracts.
Reshoring Removes The Bottleneck In Production
Reshoring offers a way to decentralise production. As it stands the bulk of the electric bikes sold in the UK are produced in China. In fact China produces about 58% of the bikes in the world. This may start to change as reshoring becomes more popular but this demand comes with problems.
When global production is centralised to one area it can cause a bottleneck in production. The manufacturers simply can’t keep up with global demand. This was a major reason for the industry’s supply shortage. Long lead times lead once more to empty shelves and disrupted cash flow.
By decentralising production through reshoring we can shorten lead times. Rather than UK production needing to keep up with global demand it needs to keep up mostly with UK demand and a degree of exports to nearby countries. It allows the growth of a comprehensive bike industry rather than a network of UK retailers with a handful of manufacturers and brands.
Since it’s catering to that much smaller market the amount of product that needs to get through the bottleneck is significantly less and doesn’t get congested anywhere near as easily. Problems that do arise are able to be taken care of much more easily too allowing for a much quicker return to normality.
Reshoring Encourages Domestic Growth
Along with the environmental benefits this might be one of the better arguments for reshoring on a large scale. While lower lead times and costs are great, plenty of companies are happy to take the risks for a lower cost it seems. Reshoring helps the domestic economy on a wider scale though.
Reshoring production means setting up production and assembly facilities, which of course will need to train and employ people. Even more than that though these facilities help to prop up the domestic economy through improved sales of UK manufactured goods both at home and abroad.
The recent slump in the pound was bad for importers, but a strong industry capable of exporting goods can take advantage of such slumps. By reshoring industry we can help prevent the weakening of our currency and also help to strengthen it through exports when it does drop.
The current UK electric bike industry is at the mercy of global economics. Because most bikes are imported the cost will go up significantly in the event of the pound dropping. By reshoring production to the UK the cost of bikes becomes more stable. That means people can keep buying them and the country can begin to spend itself back to strength.
Reshoring And CBAM
With CBAM getting closer imports into the EU are going to be affected greatly. Functionally greener products are going to be cheaper to import than products created using fossil fuels. Part of the reason for CBAM is to use the economic strength of the EU to create positive change in the industries of other countries. However with ideas like indirect carbon emissions counting towards a products carbon footprint, emissions created during the shipping process may also be counted.
The UK electric bike industry is in a great position to take advantage of this. While many bikes are imported from China, Chinese production relies heavily on fossil fuels in it’s factories, the carbon cost of shipping is also much higher. The UK on the other hand is capable of creating much cheaper imports through lower emissions shipping- simply from being closer- and using green energy in our production facilities.
While the EU is also moving towards reshoring manufacture the UK can offer a much more attractive exporter of e-bikes than China with the implementation of CBAM regulations. Once again this will allow us to strengthen the UK economy.