Simon Griffiths: It’s high time for exporting

Jul 2 2010 By Simon Griffiths

After 18 months of seeing manufacturers in the West Midlands suffer significant drops in sales, we are eventually beginning to see gradual increases in volume.

This has been typified by Jaguar Land Rover’s recent announcement of a 60 per cent jump in production over the last year. This is great news and hopefully indicates we are past the worst of the recession, but we could and should be doing more.

At the end of 2009, we ran a project called the Automotive Response Programme focusing on assisting beleaguered suppliers to work on strategically important aspects of their business. It was a great success, assisting more than 200 companies and helping save and create 3,000 jobs.

However, it is some of the statistics behind this project which make interesting reading. Almost two thirds of the companies with whom we worked, wanted to look at some sort of diversification, whereas only a staggering 7 per cent were looking to exports to develop their business.

So whilst many were comfortable committing finite cash resources to develop new products and markets, significantly less were happy to target overseas markets and they are missing a big trick.

Between 2005 and 2007, the Euro rate was hovering around the €1.4–1.5 to £1 level, it now runs at €1.2. Similarly, the dollar rate was close to $2 to £1, and now it is $1.45. So in both major markets for UK manufactured goods, we are significantly more cost competitive than we were three years ago – conservative estimates suggest about 30 per cent.

So why aren’t we exporting more? The most recent data published by the Office for National Statistics (ONS) shows that export of goods increased by 12 per cent in the first four months of the year compared with the same period in 2009. This sounds excellent, until you compare this with imports, which rose by 10 per cent, so we are essentially tracking the general economy.

We need to grow manufacturing output to help extract ourselves out of the current recession, and we should be competitive overseas with current exchange rates.

Firms of all sizes can trade overseas so it is just a case of getting into the right mindset and accessing external support from our advisers and the experts at UK Trade & Investment.

With communication and travel now bringing the global business world closer together, our manufacturers need to get on their bike, vélo, Fahrrad, bicicletta or rickshaw and see what business is out there.

* Simon Griffiths is chief executive of the Manufacturing Advisory Service in the West Midlands