LONDON--(BUSINESS WIRE)--New research from GE Capital and Warwick Business School finds a quarter of mid-market firms in the UK are considering re-shoring some, if not all, of their movable business activities within the next three years1. The cumulative effect of this is the projected creation of an extra 126,000 jobs across the UK per annum – equivalent to approximately the total current private sector employment in Newcastle upon Tyne2.
Additionally, the research finds that on average mid-market executives expect, over a three year period, to see an increase in revenues of 14.8% - or £3.8mn per firm per annum – as a result of this domestic relocation, which they estimate will help drive an average up-lift in profits of 12.1%. Cumulatively, this would add £27.6bn to national mid-market revenues annually, which are already expected to add a projected £133bn in revenues over the next 12 months.
Ilaria del Beato, Chief Executive of GE Capital UK, commented: “The synergies created by bringing back previously outsourced services to the UK, and closer to London, drive the predicted increase in revenues and will make a positive contribution to a stronger economy. In addition, the re-shoring of these activities will offer greater opportunities for existing and future workforces across the UK.”
The research finds that Greater London is the top destination for mid-market firms’ re-shoring efforts. 41% of mid-market firms who are considering relocating some of their business activity are based in London – and overall 35% of mid-market businesses anticipate this activity being directed to the Capital. Other regions most likely to ‘benefit’ from re-shoring are the South East (17%) the West Midlands, (13%) the North West, (11%) and Yorkshire & Humber (10%).
Professor Stephen Roper of Warwick Business School said: “Historically, re-shoring activity has focussed on regions outside London, yet our research indicates that mid-market firms see the value of being active in the Capital, despite the high costs associated with doing business here. This suggests that rather than acting as an agent for rebalancing the regions, re-shoring may exacerbate the growing disparity between the London economy and the rest of the UK.”
When asked to rate the most important factors considered when deciding to bring activity back to the UK, a clear trend emerged around regaining business control and lowering costs. The top five factors are:
1. Management or control issues
2. Advantageous business culture
4. Rising operational costs overseas
5. Access to skilled labour
Lord Livingston, Minister of State for Trade and Investment, commented: ““GE Capital's research demonstrates the strength of the UK's mid-market companies and their level of confidence in the economy. I'm delighted to see the signs that these companies are planning on re-shoring jobs back to the UK, and the government’s re-shoring organisation, Re-shore UK, can assist them in doing so."
Geographically, activities ear-marked for re-shoring are predominantly located within the Eurozone, reflecting the nature of current corporate activity. Indeed, almost three quarters (73%) of manufacturing and production activity that is being relocated by the mid-market is set to derive from Eurozone or broader EMEA markets. This said, a relatively high percentage of mid-market firms are set to relocate activity from Asia-Pacific for external/customer facing business services (28%) and internal business services (28%).
In relation to business activities being re-shored, the research finds a fairly uniform distribution of activity – with mid-market firms intending to be slightly more active in bringing back office activities, as follows:
1. Internal business services – 23%
2. Procurement – 21%
3. External customer facing business services – 19%
4. Manufacturing & Production – 19%
5. Product Development / R&D – 18%
About the research
The research was based on a survey of 100 mid-market executives in the UK who all stated that their organisation is expecting to move some business process / management activities back to UK in next three years. Fieldwork was conducted online during July / August 2014.
GE Capital and Warwick Business School’s broader annual mid-market research is based on more than 1,000 C-suite and senior executive online interviews across the UK, equating to more than 430 hours of in-depth interviews.
The surveys are designed, managed and executed by Millward Brown’s Corporate Practice, specialists in providing insight and advice on corporate reputation, stakeholder engagement and the wider business environment.
About Warwick Business School
Warwick Business School (WBS), located in central England, is the largest department of the University of Warwick and the UK's fastest rising business school according the Financial Times. WBS is triple- accredited by the leading global business education associations and was the first in the UK to attain this accreditation. Offering the full portfolio of business education courses, from undergraduate through to MBAs, and with a strong Doctoral Programme, WBS is the complete business school. Students at WBS currently number around 6,500, and come from 125 countries. Just under half of the faculty are non-UK, or have worked abroad. Professor Stephen Roper is Professor of Enterprise and the Director of the Enterprise Research Centre, which is an independent research centre that conducts policy relevant research on SME growth and development with the backing of £2.9 million of funding.
About GE Capital in the UK
GE Capital, one of the leading commercial finance providers in the UK, has major offices in Bristol, Manchester and the London area and focuses on providing leasing and lending solutions, from working capital and investment finance through to fleet management and equipment leasing to mid-market customers. For more information, please visit www.gecapital.co.uk
GE Capital Bank Limited, registered in England and Wales No. 02549477, registered address The Ark, 201 Talgarth Road, Hammersmith, London, W6 8BJ. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority to accept deposits. For more information, please visit www.gecapital.co.uk
GE Capital Bank Limited
Registered Address: The Ark, 201 Talgarth Road, London W6 8BJ, United Kingdom
Registered in England and Wales No. 02549477
Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority
© 2014 General Electric Company. All rights reserved.
1 Data in this release are taken from two surveys of mid-market businesses undertaken by GE Capital and Warwick Business School in 2014. A survey of 1,000 businesses was undertaken in March and a complementary, follow up survey of 100 businesses intending to re-shore completed in July / August
2 Source: Office for National Statistics, Employment by Local Authority Council within region, 2012