22 manufacturing & engineering


Manufacturing – a critical part of the South East’s economy


Manufacturing remains central to the UK economy and pivotal to any UK economy recovery, writes Robin Barnes, regional director, Solent & Thames Valley, Royal Bank of Scotland (RBS) Corporate & Institutional Banking. Much of the hope for a recovery has been pinned on the country’s ability to increase its level of exports and the manufacturing sector is crucial to this. Manufacturers account for around half of total UK exports.


The South East has an important role to play in this and is home to a large number of successful and highly-regarded companies which are leaders in their domestic and international markets. Indeed the South East accounts for 12% of the UK’s total manufacturing exports1


. Given Royal


Bank of Scotland supports many of these firms and it is one of our most important areas of focus, we have extensive experience of working with them and insight into the challenges they face.


From the manufacturing companies I have spoken to in the South East, there is no shortage of desire to export and many are already pursuing overseas expansion.


This is corroborated by recent comprehensive research2


we conducted with manufacturers’


organisation, the EEF, which shows that manufacturers’ efforts to export have not faltered: the research revealed that since the start of 2010, goods exports have grown by over a third (36%), while services exports have increased by 14%. Faster-paced growth in goods export compared with services is forecast to continue throughout 2012.


It is also apparent that manufacturers are broadening their horizons and becoming more


news extra


Haines Watts ‘Auditor of the Year’ for SMEs


Chartered accountants, Haines Watts, has won the sought-after title ‘Auditor of the Year’ in the SME category at the FDs’ Excellence Awards 2012, the biggest national celebration of excellence in financial management.


Barry Potter of Haines Watts, explained, “The award was voted for by approximately 1,200 CFOs, finance directors and senior finance professionals and announced at the London Marriott Hotel at a gala presentation. Mark Hoban MP, Financial Secretary to the Treasury, acknowledged the achievements of the winners in his keynote address.”


www.businessmag.co.uk


The FDs’ Excellence Awards seek to identify and celebrate finance directors and leaders in UK-based businesses that exemplify the very best there is. They are hosted by Real Business in association with ICAEW (the Institute of Chartered Accountants in England and Wales), supported by the CBI (the Confederation of British Industry).


The shortlist of auditors was produced following financial research and analysis conducted with company data specialist Jordans and CEO testimonials.


Michael Izza, ICAEW’s chief executive, said: “The winners demonstrate leadership, influence


and inspiration.” Dr Neil Bentley, CBI deputy director-general, added: “Strong financial discipline and rigour are essential to the success of British businesses and to sustainable growth. Congratulations go out to this year’s winners.”


Potter added: “It’s gratifying to hear that the financial sector, Haines Watts’ clients and end users are giving us such a great endorsement. We won’t be complacent however and look forward to continuing to advise and support owner-managed businesses on a national scale but using our local knowledge and business expertise.”


Details: www.hwca.com THE BUSINESS MAGAZINE – THAMES VALLEY – SEPTEMBER 2012


international in their outlook. This is partly out of necessity as our biggest trading bloc, the EU, which accounts for around 54% of UK export trade, faces continuing challenges; it is also as a result of the opportunities presented as demand shifts to the fast-growing emerging economies.


Entry into these new emerging markets is often far from straightforward. Challenges include cultural and linguistic differences, an unknown financial landscape and trying to understand the market opportunities that exist. One of the biggest obstacles is the different business practices employed in potential target markets. However, in my experience this tends to be based on perception rather than first-hand experience.


The perception issue presents its own difficulties and is one which needs to be overcome if the UK is to successfully achieve an export-led recovery. This is where organisations such as trade bodies, government and, indeed, the banks come in.


Much of our work with manufacturers in the region is around providing support and advice. It is amazing to find that many companies are put off exporting, particularly to high-growth, non-European countries, because they simply do not feel sufficiently confident or well-informed to pursue the potential opportunities.


We have found that many of these perceived barriers can be side-stepped by rethinking their export strategy. Many companies exploring new markets prefer to do so cautiously at first, operating from their central base and keeping their overheads down while they find their feet.


However, this can be a false economy: the appointment of a local agent who has local language knowledge, an understanding of


accepted business practices and a wide range of contacts to ensure opportunities are pursued can go a long way to helping a company establish itself in a new and unfamiliar territory.


The number of government initiatives to support companies looking to export has also increased, filling the gaps and providing practical help in entering new markets. The Overseas Market Introduction Service (OMIS), for example, has been instrumental in helping exporters to make contacts and sales that they would otherwise not have otherwise achieved on their own.


While perception is one issue, there are also trade barriers which can hinder companies’ ability to export. Poor credit protection is a particular issue raised by companies looking to export to emerging markets. Indeed, 38% of companies interviewed in the EEF/RBS research, said poor credit protection was a barrier for exporting.


In spite of this, the figures which show a significant increase in sales to markets outside of Europe would suggest that these barriers too can be overcome.


The foundations of strong export growth have been laid – and the good news is that UK manufacturers are increasingly looking to enter new markets and actively planning to invest to fulfil their exporting ambitions. However, initial entry into these markets can be confusing and even off-putting. Businesses often just need the right information, support and encouragement to ensure they take advantage.


1 Source: HMRC


2 The survey of 100 manufacturers was carried out in December 2011


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