Raspberry Pi manufacturing starts; Silly tax policy means it's done abroad for now [Update:] Petitio


Prometheus

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Well, at last, manufacturing of the Raspberry Pi started a couple of days ago. I'm posting this outside of the dedicated Raspberry Pi thread because one aspect of it is utterly ludicrous.


I'm just going to quote what they've said about it;

Unfortunately, we’ve not been able to manage manufacture in quite the way we’d hoped. As you will know if you’ve been reading the forums and the articles on this website, the Raspberry Pi Foundation had intended to get all its manufacture done in the UK; after all, we’re a UK charity, we want to help bootstrap the UK electronics industry, and doing our manufacturing in the UK seemed another way to help reach our goals.


We investigated a number of possible UK manufacturers, but encountered a few problems, some of which made matters impossible. Firstly, the schedule for manufacture for every UK business we approached was between 12 and 14 weeks (compared to a 3-4 week turnaround in the Far East). That would have meant you’d be waiting three months rather than three weeks to buy your Raspberry Pi, and we didn’t think that was acceptable.


Secondly, we found that pricing in the UK varied enormously with factories’ capacity. If a factory had sufficient capacity to do the work for us, they were typically quoting very high prices; we’d expected a delta between manufacture pricing between the UK and the Far East, but these build prices not only wiped out all our margin, but actually pushed us into the red. Some factories were able to offer us prices which were marginally profitable, but they were only able to produce at most a few hundred units a month; and even then, we were doing better by more than five dollars per unit if we moved that manufacture to the Far East. When you’re talking about tens of thousands of units per batch, losing that sum of money for the charity – a sum that we can spend on more manufacture, more outreach work and more research and development – just to be able to say we’d kept all the work in one country, starts to look irresponsible.


I’d like to draw attention to one cost in particular that really created problems for us in Britain. Simply put, if we build the Raspberry Pi in Britain, we have to pay a lot more tax. If a British company imports components, it has to pay tax on those (and most components are not made in the UK). If, however, a completed device is made abroad and imported into the UK – with all of those components soldered onto it – it does not attract any import duty at all. This means that it’s really, really tax inefficient for an electronics company to do its manufacturing in Britain, and it’s one of the reasons that so much of our manufacturing goes overseas. Right now, the way things stand means that a company doing its manufacturing abroad, depriving the UK economy, gets a tax break. It’s an absolutely mad way for the Inland Revenue to be running things, and it’s an issue we’ve taken up with the Department for Business, Innovation and Skills.

It's that last paragraph that's the most ridiculous part: British businesses are penalised for manufacturing in Britain.


I gather that this is a holdover from a time when we had industries here - a tax on importing components, to encourage people to use ones produced locally. The problem is, those don't exist anymore, and thus we have this strange situation whereby it costs less to produce a British-designed product outside of Britain.


Still, at least they're in production now, and hopefully things will change in the future. I gather that a petition, if approved, may be going live on the government's website about this taxation matter within the next week or so, too, so that ought to be worth a look.
 
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gadgetoid

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Wow. Just wow. All this job shortage bullshit, and the tanking economy and none of the morons "in charge" recognise and fix simple things like this... *sigh*


Signed.
 

EvilDragon

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Hmm? Is the tax really handled like that in UK?


Usually (AFAIK in all of Europe) the only one who has to pay the import VAT is the final customer.


Yes, if you import stuff, you have to pay VAT, which you can claim back 1 - 2 months later.


Or is he really talking about some import tax for components?


In Germany, there's 0% tax on electronic components... is that different in UK? :eek:
 

Prometheus

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^ As far as I can tell, it was some protection measure for local industries, from back when we had them, to discourage the importing of foreign components and to encourage domestic businesses. Nowadays, it seems that it's turned around to bite everyone.
 
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