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The business of 'backshoring'
03:23 - Source: CNN

Story highlights

Part of Hornby's Airfix range, the iconic model plane kit, will soon be made in the UK

Now the company can react to market demand much faster and the CEO can keep an eye on the quality

In China private-sector wages rose 14% in 2012, up from a 12.3% increase in 2011

CNN  — 

UK company Hornby’s model planes and trains have been made in low-cost emerging markets for decades. Now, piece by piece, production is being brought back home.

Hornby’s iconic model plane kit, part of the company’s Airfix range, will soon be made in the UK. The company will be making up to 1,000 of the kits a day.

“It’s a very British brand with huge heritage.. once upon a time it was all manufactured here in the UK,” says Roger Canham, Hornby chief executive. “Airfix actually went to India, but the marketplace is changing now.”

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Hornby’s reversal is the latest in the trend of “backshoring” that has seen British businesses such as Topshop, Symington’s, Caldeira, and DFS, all repatriating some manufacturing from China in the face of rising labor costs overseas.

Canham says offshoring production has never been easy. “Some of the difficulties you have are going to a different time zone, talking to people who don’t necessarily speak the same language, actually, or culturally, or even technically.”

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Those were challenges Canham was willing to face when the cost-saving was significant. But such benefits are no longer a given.

In China, private-sector wages rose 14% in 2012, compared to a 12.3% increase the previous year, according to China’s National Bureau of Statistics. The ageing population has led to a shrinking labor force, likely to contribute to rising wages in years to come.

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This isn’t Hornby’s first back-pedal on production in an emerging market. Earlier this year, it brought some of its Humbrol paint facility back from China following labour disputes and concerns about quality. Offshoring production also meant there was a lag time in meeting consumer demand.

“Just the physical shipping time will be about four weeks,” Canham says. “So even if we found out today that this product was selling very strongly and we placed additional orders, that’s four weeks of the market that we have potentially missed.”

Now the company can react to market demand much faster and the chief executive can keep an eye on the quality of the production of the Airfix models, once more labeled “Made in Britain.”