IGD chief encourages more UK food processing "off-shore"
Manufacturers should concentrate on producing high-value food and drink in the UK and move all other production to where costs are lower, said Tate & Lyle chief executive and outgoing president of the IGD, Iain Ferguson.
"We shouldn't be afraid of off-shoring," Ferguson told an IGD conference, adding that it would "make the global pie that much bigger" and help companies to become more competitive as globalisation accelerates.
His view was echoed by James Hill, chairman of Unilever Ice Cream and Frozen Foods, who said: "Manufacturing is increasingly governed by that globalisation process. Economic activity will move to where it can be done best."
Only 10% of Unilever's turnover is from products made in the UK, although the R&D is based here.
"I fight the UK's corner, but it is difficult to argue against lower labour costs," said Hill, who added that while it made sense to build factories in eastern Europe there were no plans to move production overseas "yet"
Hill said it was "getting harder and harder" to capitalise on the benefits of operating in the UK. "To keep manufacturing in this country, we need to keep going upmarket," he said, although Debashish Chatterjee, director of the food arm of software company SAP, pointed out that most products commanded premium margins for just 3-5% of their lifespan.
- Manufacturers are confident about the future of UK food production, according to an IGD survey, sponsored by SAP.
Of more than 200 food and non-food companies surveyed, 73% had increased UK production capacity and 55% overseas capacity in the past five years .
Of those companies surveyed 63% were investing in technology and automation, 53% improving best practice, 95% were collaborating with customers and suppliers and 90% had started cost-cutting programmes.
