We have received reports from several customers and many more enquiries from OEM companies who are experiencing significant price increases of their components from The Far East. These unexpected rises are reducing margins and were unforeseen at the start of any transfer exercise. When coupled with rising energy prices they are, in turn, affecting sales. We have heard reports of Far Eastern suppliers leaning on UK buyers when they know they have a stranglehold on their supply chain, and also heard of companies who started negotiations on new product ranges and through the course of the design for manufacture over 1 year, pricing literally doubled. When you add the significant cost of manning the projects, travel, hotel costs , subsistence, copyright claims and then suspect quality issues, you can see why the questions are being asked, are we heading ‘Back to the future’ and re-establishing the UK as our manufacturing base?

Similar stories are heralding from Eastern Europe but mainly for the euro exchange. The pound has dropped nearly 20% against the euro in the last 3 months from euro 1.46=£1 to euro 1.25=£1. The credit crunch and Northern Rock fiasco have brought about a general attack on the pound as currency speculators move into other currencies. Many manufacturers are now reassessing their manufacturing. A large European OEM has reported that across their manufacturing sites globally, their newest plant in the Far East although successful, has not brought about the kind of savings they were hoping for. We knew of legal and logistical issues, but the latest trend may lead UK OEM’s to question whether perhaps the UK is going to provide a safer and more trusting longer term bed for manufacturing who distribute to the northern European region?

Also we beg the questions would a change of government make shipping more expensive to fit with their greener policies, and how will the Chinese manage the growing concerns in Tibet and also how will they be viewed during and after the Olympics summer 2008? If you are concerned with your supply chain or are contemplating The Far East, Then contact HBC sales for best practice advice on +44 (0) 1293 897200