Bringing Manufacturing back to the UK

[jpendle]

Moving manufacturing around the globe is not that simple. The reason that virtually all electronics are made in SE Asia is because, that's where the supply chain is. Everything is made there, plastics, switches, enclosures, components, IC's, bare PCB's, etc, etc. The final manufacturing is only a small piece of the puzzle.

In order to build a mobile phone or computer in the UK you would have to import all the relevant bits from Asia unless you can convince your suppliers to move as well.

As for quality, you get what you ask or pay for. Every Apple product you own was made in China by Foxconn, the quality of Apple products is not in question, they make sure that their suppliers are measured at every level to ensure that corners are not cut. If you ask ACME manufacturing to make a DC motor for a train they will, if you then ask for a price cut you'll get one, but ACME will be cutting back costs in manufacturing and quality will suffer, this doesn't just happen in China it happens everywhere.

Bottom line is that if you want quality you have to pay for it, whether it's made in the UK or Asia.

As for the Dinky example of being able to buy through the back door then that is Dinky's problem.

To get into a major electronics plant in China you have to be screened through metal detectors and NOTHING is allowed to leave other than by the containers parked in the loading dock, at some plants even employees of the US or UK based companies have to wear scrubs so that underwired bras, studs on Levis jeans, etc ,etc don't set off the metal detectors, no jewellery, or pens, or watches, or phones, or ring binders, are allowed in.

For a 10 pound car that's probably overkill, but for a 2000 pound Apple MAC then it's worth it.

Regards,

John P

[Chris Morris]

Calculating the total cost of anything manufactured is very difficult. The piece price charged by the manufacturer is of course known but there are so many other costs. Shipping, having cash tied up in goods on the high seas, distance from manufacturer causing quality problems and delays to name but a few. All of these are costs to the business which may be difficult to allocate accurately to piece cost.
Production of current items cannot be moved from China because, although you will have paid for the tooling the Chinese will not let you move it out of China. I would expect that amortisation of tool cost is a significant part of the cost of any model. The Chinese have expertise in this area that we would have learn in the U.K.
As the cost base in China increases it is possible that one day in the future a new design item might be made in the UK but the lower wage economies in parts of the EU.
USA Trains manufacture some wagons in the USA and manage to sell them at a reasonable price so it is possible.

[red_death]

Mike
They are using schoolgirls no brighter than ours and training them.  I literally have been there and done that.   "No skills" are a capitalist propaganda weapon and complete rubbish. 

They are not using schoolgirls to do the difficult parts though - ie tool making, CAD design, artwork etc.  Some of those skills are available in the UK, but finding a tool maker and injection moulding for the sorts of volumes (and prices) we are talking about is very difficult.

I don't see what is capitalist propaganda about any of that.  I'm sure if I chuck enough money at people we could get things made in the UK, but then you have tripled your price easily and gone bust. 

So perhaps I was taking a short cut when I said the skills weren't available - more accurate would have been the skills aren't available at a price the market will pay.

Cheers, Mike

[acko22]

With all this there is 2 factors that people have not seemingly looked at in my opinion:

1) We have for 100s of years been an island trading nation, exporting what others cant offer.
2) if you look at what the UK is listed as in terms of trade we are not a base manufacturing nation any more and haven't been since the 1980, these days we trade mostly in services (banking, IT , consulting and the like) followed by high technology exports (Defence products, Satellites, modern aircraft components)

With these factors the idea of the UK becoming a major manufacturer in any areas is less and less realistic, but anything UK made we pay a premium for the quality or tends to be of inferior quality to out sourced factories abroad.

Only time will tell if production remains in china in the long term (there was rumbles of it moving to India for some firms), it will all depend on future costs and well any UK - China trade deals, but no doubt as china develops it will out price it self from the market and production will move but I doubt back to the UK all manufacturers will move to the next cheaper country

[joe cassidy]

I think I'll put on my Chinese Doc Martens and kick this thread into touch.
Sorry, Joe, but as far as manufacturing model railway stuff such as Farish, Dapol and DJM, it's just not going to happen in the UK

I agree with you Mick. I don't mind paying 200 euros for shoes made in England instead of 100 euros for asian shoes because I will get the benefit of the extra quality every time I wear them over a period of several years.

However, I would not pay an extra 100 euros for an N gauge loco made in England compared to a Chinese one.

Just to close, I have the impression that the analogy between shoes and model trains is valid because there seems to be quite a few manual operations in both manufacturing processes.

Best regards,


Joe

[longbow]

The last quote I saw was an iPhone would cost $5 more to make in the US rather than China

I don't know where you got that from, but MIT last year estimated that a shift to US production would add $30-40 ie about 15% to the cost of an iPhone 6 whilst more recent articles suggested the cost would double.
   
Those producing model railway stuff appear to think that UK manufacturing remains impractical.

[Snowwolflair]

Mike
They are using schoolgirls no brighter than ours and training them.  I literally have been there and done that.   "No skills" are a capitalist propaganda weapon and complete rubbish. 

They are not using schoolgirls to do the difficult parts though - ie tool making, CAD design, artwork etc.  Some of those skills are available in the UK, but finding a tool maker and injection moulding for the sorts of volumes (and prices) we are talking about is very difficult.

I don't see what is capitalist propaganda about any of that.  I'm sure if I chuck enough money at people we could get things made in the UK, but then you have tripled your price easily and gone bust. 

So perhaps I was taking a short cut when I said the skills weren't available - more accurate would have been the skills aren't available at a price the market will pay.

Cheers, Mike

There is a very large industry segment in the UK tooling for PEP (Precision Engineered Plastics) with thousands of trained specialists and toolmakers.  Just do a web search for PEP manufacturers in the UK.  We have everyone we need here already!  As for cost  the differential of 20% on the sinking pound plus this years Chinese mandatory salary rise, they must be already increasing the cost to make the Pendolinos by 25-30% assuming you started today and I assume you have pre-paid and hedged to avoid this.

As far as the $5 extra cost to make iPhones that was a difference in the assembly cost in the US rather than in Far East (Parts sourced from same places).  This reflected a manpower + automation in the US vs a manpower only operation in the Far East.  Yes they do some automation in China but nothing like new factories in the west.  The MIT figures assumed you used the same manpower in the US as used in the Far East with no increase in automation, which shows how blinkered academics can be.

Remember one of the most efficient car factories in the world is the Nissan plant in Sunderland, not some Chinese factory, why? because it was designed for high automation from the ground up.

Remember it is human nature to follow the heard and making models in the same Chinese factory as everyone else is safe (no one got sacked for buying IBM) but at some point a manufacturer will take the plunge and get models made here.  My guess is it will be for a wagon or coach rather than a locomotive.

Political comment removed. ................QED Rapido Trains Inc will soon be manufacturing in the US.

I will now take the saddle of my high horse. 

[red_death]

There is a very large industry segment in the UK tooling for PEP (Precision Engineered Plastics) with thousands of trained specialists and toolmakers.  Just do a web search for PEP manufacturers in the UK.  We have everyone we need here already!  As for cost  the differential of 20% on the sinking pound plus this years Chinese mandatory salary rise, they must be already increasing the cost to make the Pendolinos by 25-30% assuming you started today

But not at the price or volumes model train manufacturing needs! Why make a highly detailed model train when you can injection mould 10s of thousands of something much simpler.  The sinking pound doesn't make it cheaper to manufacture here, it just means manufacturing abroad is more expensive - when the market is so price sensitive increasing costs by moving production to the UK just doesn't work.

There is at least one RTR model company in the UK, but that is 7mm.  If we could charge 7mm level prices (margins are much, much higher in 7mm from the figures I've seen) then we would perhaps manufacture in the UK.  £600 for a 92 anyone?

Cheers, Mike

[DELETED]

Gosh I'd love to bring back production to the UK for good reasons (carbon footprint these days for one) but reading this thread and the way it's posed I can't really explain experience working abroad or why I think so -it's entirely political whatever way I look at it so I'll keep shtum.

Rich

[NinOz]

From MIT's review to illuminate some misconceptions.
This is what it really says:

Current situation of manufacturing in China of Apple's I-phone.
Cost of components of a I-phone 6 Plus is approx $230.
Cost of assembly of these parts is estimated to be $4 to $10.

If assembly was moved to USA.
An increased cost of $30 to $40
"That's partly because labor costs are higher in the U.S.,
but mostly it's because additional transportation and logistics expenses would arise from shipping parts, and not just the finished product, to the U.S." 
https://www.technologyreview.com/s/601491/the-all-american-iphone/

Bear in mind that manufacturing electronics in any country is very highly automated from production of base materials to sub-assembly.  Human involvement is only done where it is cost effective (cheaper than machine) or not possible to use current robotics.
China is no exception.  Since their manufacturing base is fairly recent they usually have the best equipment (a lot made in USA).

If manufacturing was moved to USA.
"Dedrick and his colleagues estimate that producing the constituents of an iPhone in the U.S. would add another $30 or $40 to the cost of the device."
https://www.technologyreview.com/s/601491/the-all-american-iphone/

So the all up increase would be around $60 to $80.
All manufacturing requires human involvement whether robotic or not, in the USA this is an extra cost which is added at each level of production not simply at the final assembly stage.

One further consideration is the pool of talented smart workers, with the huge population the pool is much larger.
"As Steve Jobs once told President Obama when he asked why Apple didn't make phones in its home country, the company didn't hire manufacturers in China only because labor is cheaper there. China also offered a skilled workforce and flexible factories and parts suppliers that can, Apple believes, retool more quickly than their American counterparts."
https://www.technologyreview.com/s/601491/the-all-american-iphone/

I could imagine that moving production of model trains to any advanced economy would encounter the same problems.

CFJ

[Snowwolflair]

From MIT's review to illuminate some misconceptions.
This is what it really says:

Current situation of manufacturing in China of Apple's I-phone.
Cost of components of a I-phone 6 Plus is approx $230.
Cost of assembly of these parts is estimated to be $4 to $10.

If assembly was moved to USA.
An increased cost of $30 to $40
"That's partly because labor costs are higher in the U.S.,
but mostly it's because additional transportation and logistics expenses would arise from shipping parts, and not just the finished product, to the U.S." 
https://www.technologyreview.com/s/601491/the-all-american-iphone/

Bear in mind that manufacturing electronics in any country is very highly automated from production of base materials to sub-assembly.  Human involvement is only done where it is cost effective (cheaper than machine) or not possible to use current robotics.
China is no exception.  Since their manufacturing base is fairly recent they usually have the best equipment (a lot made in USA).

If manufacturing was moved to USA.
"Dedrick and his colleagues estimate that producing the constituents of an iPhone in the U.S. would add another $30 or $40 to the cost of the device."
https://www.technologyreview.com/s/601491/the-all-american-iphone/

So the all up increase would be around $60 to $80.
All manufacturing requires human involvement whether robotic or not, in the USA this is an extra cost which is added at each level of production not simply at the final assembly stage.

One further consideration is the pool of talented smart workers, with the huge population the pool is much larger.
"As Steve Jobs once told President Obama when he asked why Apple didn't make phones in its home country, the company didn't hire manufacturers in China only because labor is cheaper there. China also offered a skilled workforce and flexible factories and parts suppliers that can, Apple believes, retool more quickly than their American counterparts."
https://www.technologyreview.com/s/601491/the-all-american-iphone/

I could imagine that moving production of model trains to any advanced economy would encounter the same problems.

CFJ

I'm sorry but the link you give to the MIT opinion piece starts with "Donald Trump says" and it is published by a left wing academic institute in the middle of an election year. 

You think Apple gave then such commercially sensitive numbers, or do you think they cooked them up.

[TylerB]

Another factor not being taken into account is that the model railway industry is changing. Not every young boy (or girl) wants a train set anymore, so there's no reason to run a large Triang factory to churn out train sets. The big companies like Hornby and Backmann have been consolidating and hoovering up lots of smaller brands in order to remain large enough to manufacture in any kind of quantity (and Hornby is doing very badly at the moment, by all accounts).

It's becoming a much more small scale and specialist sector, and new advances like 3D printing are only going to intensify that. Smaller companies may well be the future of this hobby and they might well consider manufacturing in the UK, just because of the simple fact that they don't have the scale or specific skills to commission and manufacture product abroad. However they are realistically going to just be small scale operations, employing a few staff at most.

This isn't a pessimistic view of things by the way, the hobby is still going strong, it's just changing into a different kind of business.

[railsquid]

There is at least one RTR model company in the UK, but that is 7mm.

In N gauge don't forget Union Mills (though I do forget whether the Isle of Man is technically part of the UK or not, but it certainly ain't China), though I guess that's a small 1/2 person operation which wouldn't be able to scale up effectively.

[Bealman]

I think that Union Mills would have to be a British model railway success story.

[DesertHound]

My Tuppence worth if I may, on what is a very interesting, if emotive, subject.

I quote TylerB's post above ...

Another factor not being taken into account is that the model railway industry is changing. Not every young boy (or girl) wants a train set anymore, so there's no reason to run a large Triang factory to churn out train sets. The big companies like Hornby and Backmann have been consolidating and hoovering up lots of smaller brands in order to remain large enough to manufacture in any kind of quantity (and Hornby is doing very badly at the moment, by all accounts).

It's becoming a much more small scale and specialist sector, and new advances like 3D printing are only going to intensify that. Smaller companies may well be the future of this hobby and they might well consider manufacturing in the UK, just because of the simple fact that they don't have the scale or specific skills to commission and manufacture product abroad. However they are realistically going to just be small scale operations, employing a few staff at most.

This isn't a pessimistic view of things by the way, the hobby is still going strong, it's just changing into a different kind of business.

Now, if we take this and combine it with a quote from RedDeath, we get close to my analogy of where things "might" be heading ...

There is at least one RTR model company in the UK, but that is 7mm.  If we could charge 7mm level prices (margins are much, much higher in 7mm from the figures I've seen) then we would perhaps manufacture in the UK.  £600 for a 92 anyone?

Cheers, Mike

I believe demographics (generation iphone "ain't" buying model trains) will change the industry. Yes, there will be enthusiasts coming into the hobby in adulthood, but I don't think the volumes that are even produced today (which I imagine are less than 30 years ago) will continue to be produced in the future. I could be wrong and those growing up now with fangdangled electro gizmos might suddenly wake up in their thirties and come over all nostalgic. Who knows? We aren't there yet and we do not know how the influence of ipads etc. is going to influence the generation growing up now. Lego have been doing well, so there's hope still. One thought I often do have though, is that adults of today DID have exposure to model railways and other "boyish" (sorry girls, no sexism intended) hobbies, and so reconnecting with them in adulthood is something completely understandable. My concern with the current generation of kids is that there is far less exposure to such hobbies (unless your mum/dad is a model railway enthusiast, you live next door to the village hall which hosts the local MRC, and so on). The exposure today is overwhelmingly homogenous in that it consists of ipads, galaxies and facebook (in my opinion). Yes there is variety within the world of facebook or whichever other app / chat thingy that is used, but the pursuit itself is homogenous ... a pursuit which involves staring at a screen and not getting involved in creative hobbies. Therefore, I struggle to see how levels of demand for model railways will be sustained going forward.

So, what does this mean, and how does it tie into production in China vs. the UK? Given my thoughts on the above, I too believe that the hobby will become more specialist, as eluded to by TylerB. If it becomes more specialist then I believe production and many things related to it will gravitate towards where the customer base is - or at least towards a location which also has a customer base (in our hobby that would be Japan, Germany, Switzerland etc. where the industry will, I imagine, be going through, or go though in the future, the same changes as the UK).

There will be little point in churning out a few thousand of xyz loco if there's only a demand for a few hundred - hence the factories in China won't be interested in producing them (they'll get more orders for ipad covers and the like). The likes of Farish & Co. could go either of two ways. They could see this coming and "move with the tide", producing less models with their resultant higher prices (which I think we might be seeing already), or they could churn out higher volumes at lower prices, leading to the risk of unsold inventories, pressure to sell anything profitably. If they choose the first route (which I think they are), we have two things happening: 1) Smaller production 2) Rising prices. Both of these move us closer to a point where production in the UK (or other country with a specialist customer base) becomes tenable. I don't know when that point will be, but my thoughts are if those two factors continue (smaller production / higher prices) then we are moving towards a niche, which lends itself to production in a higher wage economy. I don't see the discussion as being "would Farish move production back to the UK?" Rather it is a case of the conditions being set for production to be possible in the UK (lower volumes, higher prices) and then someone else will take up the mantle.

Model trains becoming an even more specialist product will mean prices rising, but economically speaking, it will be the only way for the industry to continue. Who knows, the quality might even rise further as the hobby goes more niche (look at the precision engineering in the very large gauges) but the down side will be that it will become even more of a "rich man's hobby". And herein lies the reason I included the quote from RedDeath ... GBP600 for a 92 anyone?

I'd love to hear your thoughts on the above. I find it a fascinating discussion and remember, most of the above isn't fact, but rather opinion.

Cheers

Dan