Offshoring puts UK supply chain at risk, says report

The move to relocate increasing volumes of packaging production overseas, much of it following the food industry itself, is putting the entire supply chain at risk, says the outgoing chief executive of the Packaging Federation (PF).

Echoing the latest PF report on the state of the UK industry, Ian Dent says: "Since 2004, the trend in mergers and acquisitions hasn't just been about reducing excess capacity in the UK. It's been about moving out altogether."

Up to 2004, says the report, the reorganisation of the industry appeared to favour improved productivity. But since then, it argues, it has been more symptomatic of an overall decline in competitiveness. The report singles out the larger food and consumer durables brands as leading this trend towards production in the new EU member states and Asia.

Dent, who will leave the PF at the end of the year, adds: "The process has gone beyond the economic drivers of reducing costs, to the point where it is jeopardising a sustainable supply chain organisation."

If the process continues, he says, UK industry risks losing a reliable local supply base offering innovation and added value. Changes such as the forecast transfer to Chinese production to meet growing domestic demand could also endanger longer-term supply.

Dent argues: "The entire food supply chain needs to stop and take a strategic look at what its needs will be for the next five years and beyond."

Over the years, the PF says it has tried to work with the Department of Trade and Industry to address industry issues. But Dent adds: "Unfortunately, its influence appears to have waned at the same rate that manufacturing itself has declined." The federation now calls into question the relevance of the Department for Trade and Industry to manufacturing as a whole.