UK manufacturers call for better export support

BCC report reveals a third of manufacturers want improved support from the Government to help them export

A quarter of UK manufacturing companies do not trade overseas

Companies identify export controls as the top barrier to doing business abroad

In a comprehensive review launched today by the British Chambers of Commerce (BCC), entitled “Manufacturing for export: Make or break for the British economy”, UK manufacturers identify the barriers to export, and call for additional support to ensure growth in the sector.

Incorporating a survey of 500 manufacturing companies, 19 in-depth business case studies, and a thorough analysis of economic statistics, the report reviews the obstacles faced by UK manufacturing firms, in addition to recommendations on Government policy. It follows the publication of BIS’ Growth Review Framework for Advanced Manufacturing, and ONS statistics revealing the UK trade gap had widened.

In our survey of 500 companies:

• 27% of respondents said that they didn’t export at all, while a further 15% only made 10% or less of their turnover from international trade
• A third (34%) exported over half their turnover; 39% exported under half, and a fifth (20.3%) exported under 20%.
• Nearly half of businesses (47%) who don’t export believe there is sufficient business in the UK for their needs, while almost a quarter (23%) did not have a suitable export product. 16% said it was because they had a limited knowledge of exporting.
• 46% of exporters said that their export volumes had grown during the past five years, while only 11% said they had shrunk. For 41%, export volumes have stayed the same.
• 82% of firms identified export controls as an issue for their manufacturing and export potential; followed by the price of sterling, regulation and access to finance.
• UK manufacturers called for continued low interest rates (38%); better export support from the Government (33%); and improved access to growth capital (22%) to help them grow.

 Commenting, David Frost, the BCC’s Director General, said:

“Britain’s manufacturing industry is alive and well; strong, productive and innovative. No longer the Cinderella sector, it is the powerhouse of the UK and will play a vital part in securing our future economic growth. But this revival has to be lasting and sustainable. The Government must prescribe the right policies to encourage growth and allow manufacturers to export their way out of the recession.

“British exports haven’t grown as predicted despite the competitive valuation of sterling. Our industry needs to rediscover its trading spirit, and become far more proactive when it comes to exporting. Businesses must look for export opportunities for their products – especially in high-growth developing markets.

“Long-term Government support is vital. State-backed trade promotion and improved export support will stimulate the UK’s current and future exporters. Governments in all major developed economies provide business with international trade services to help them to access new markets. The UK must do the same. We urge the Government to think manufacturing in everything that it does to ensure 2011 is a Year for Growth for UK industry.”

While the UK is the 7^th largest manufacturer in the world, it has witnessed a decline in its overall global share. Exporting is central to many manufacturing businesses who often find that the home market is too small for sustained growth. For many manufacturing firms, lack of trade finance is a key barrier to exporting. Problems during the recession, coupled with a lack of access to export finance for riskier markets, have left many British exporters in a weak position compared to rivals from exporting nations with access to state-backed schemes.

Recommendations for improving exports amongst manufacturing firms include the creation of a state-backed trade credit insurance scheme; the broadening and simplification of R&D Tax Credits; clarification around the impact of a reduction of Capital and Investment Allowances on manufacturing firms; and improved education and better promotion of UK trade.

Notes

Case studies

A full report of these case studies can be found on the BCC’s website at www.britishchambers.org.uk.

Companies quoted in the report include:

• PD Castings                       Brake discs for automotive industry
• Superior                              Precision rubber seals and mouldings
• TDSi                                   Access control systems
• Molyslip                              Industrial lubricants
• Hadley Group                     Cold-rolled pressed steel
• Surface Print                       Hi-spec wallpaper
• Thomas Dudley                 Plastic injection mouldings for bathrooms and foundry
• PMT Industries                  Yankee driers for paper industry
• Dynamax                            Content scheduling software
• Deltex Medical                   Medical monitoring equipment  
• Smith of Derby                   Clock and timepiece makers
• PP Electrical Systems      Electrical control systems for machinery
• Minivator                              Lifting equipment for elderly and disabled people
• MANN+HUMMEL UK         Car components
• Solutions Group                 Wholesalers to TV installers, sound, lighting, and security industries
• Hotel Chocolat                    Luxury chocolate
• JDR Cables                        Subsea transmission and umbilical cables for energy industry
• H. Weston and Sons         Cider
• Malvern Instruments           Particle sizing and measuring equipment

Methodology

Our research on manufacturing has focused on working with key businesses from around the Chamber Network. As the voice of local business, we have travelled around the country talking to a range of companies manufacturing a whole variety of products and have undertaken 19 in-depth case study interviews

During the course of our research we also have conducted a telephone survey of 500 manufacturing firms to try and gauge a wide base of business experience.

We have likewise taken evidence from the BCC’s Quarterly Economic Survey (QES), which is the largest business survey of its kind. The QES looks at key indicators of economic health, which include domestic activity, exporting activity, investment intentions, confidence, and employment. The survey is a highly respected and credible indicator of the overall performance of the UK economy. Because of the large number of respondents and long time series, it is widely used by policymakers and economists.

To further compliment out research, a manufacturing roundtable was held which brought together manufacturing businesses, policy decision makers from Westminster and Whitehall, banks, trade associations and Chambers of Commerce from across the country.