Laura Capper, Head of Manufacturing & Construction, NatWest

Richard Rumbelow, Director of International Business, Make UK

Rimante Bang, UK Export Academy Adviser, Department of Business and Trade

Tim Hedges, Finance Director, European EMC Products Limited

Ways in which increasing international trade could benefit UK manufacturing

• Open up new markets
• Boost exports
• Foster economic growth
• Access to a larger customer base
• Enhanced competitiveness
• Specialisation leading to improved efficiency and innovation

According to Make UK, manufacturing accounted for 49% of all UK exports in 2023, contributing over £432bn to the economy, of which £230bn was exported to the European Union.

“In an increasingly interconnected world, the importance of trading globally cannot be overstated, particularly for a manufacturing powerhouse like the UK,” says Laura Capper.

“However, although there are signs that more companies are undertaking export activity, this is tempered by reduced volumes of trade overall.”

Although global trade growth in 2023 was lower than previous years, there is an expectation that global trade and confidence will improve in 2024, says Richard Rumbelow.

“There is a positive outlook from manufacturers in terms of global trade, and of how they think the economy could perform and translate into trade activity. But it’s a fragile outlook, and subject to immediate change.”

Several considerations and factors have brought us to this point, he adds.

The pandemic response and subsequent increase in costs in major economies pushed inflation to new heights. Other drivers of disruption persist that need to be considered by active trading customers whether in the UK or overseas; the war in Ukraine drove up commodity prices, while attacks across major shipping routes in the Red Sea and Suez Canal led to a short-term trebling of freight delivery cost and similarly steep rises in delivery times.

And a series of measures have resulted in trade restrictions hindering access to the US and EU markets for some. These include the Inflation Reduction Act and the CHIPS and Science Act in the US, plus similar measures to stimulate manufacturing capacity and growth in the EU.

Rimante Bang, UK Export Academy Adviser at the Department of Business and Trade shares some of the potential benefits of selling overseas:

1. Drive more sales
   Tapping into new markets and customer segments could increase your sales, revenue streams and sometimes profit margins.
2. Reduce commercial risk
   Diversifying the markets that you are trading with could help mitigate the risks associated with relying solely on domestic sales by spreading your activity more widely.
3. Improve your competitiveness
   Successfully entering international markets could enhance your brand image and reputation.
4. Motivate your employees
   Staff tend to experience more growth in their business, plus opportunities to upskill and explore new countries.
5. Gain new ideas
   Exporting exposes businesses to new ideas, technologies, and different business practices, which could then be implemented successfully in the domestic market.
6. Benefit from economies of scale
   Greater production could lead to better profit margins and increased competitiveness of your business.
7. Reduce the impact of seasonal fluctuations
   Because in some markets around the world, seasons could be different or extended for longer.

When selling overseas for the first time or to a new market, other considerations include:

Prepare for a potential rise in costs

• Exporting requires additional investments in market research, market entry strategies, product adaptations, and marketing to ensure you are resonating with the market you are targeting.

Consider country-specific risks

• Political, cultural, economic, infrastructure and even climate differences could impact the way to do business in that country.

Trade barriers to overcome

• Tariff barriers – these are taxes imposed on imported goods, which makes them more expensive for foreign buyers.
• Non-tariff barriers - these include various regulations, standards, licensing, and different requirements and administrative procedures in your target markets.

“These can hinder your progress if you’re not aware of them,” cautions Rimante. “They are sometimes challenging to identify and address, so seek support on specific markets and some of the issues other manufacturers are facing.”

Identify different logistics and customs rules

• Processes and compliance regulations are likely to be different than what you are used to in the domestic market. You will need to learn how to adhere to and manage those in your target markets.

Assess the financial risks of exporting

• Consider how you will get paid, how you will ensure that you are paid on time, your payment terms, and the currency you want to get paid in.

When looking at developing your export strategy, it is important to consider how international markets can differ to the UK, along with the investment required to research and enter those markets. With the right expertise, the risks associated with global trade could be safely managed, so do seek insight from trusted partners.

Did you know you can seek support from the Department for Business and Trade? Whether you need help on registering your company, finding a target market that is right for you, or deciding on a route to market, visit great.gov.uk for more information.

You can also join the UK Export Academy, a free online training programme from the Department for Business and Trade, brought to you by international trade specialists and designed to give UK businesses the confidence and know-how to grow sales of their goods and services globally.

Explore the benefits and challenges of trading outside of the UK, prepare your future export plan, network with like-minded businesses, and take the next steps in taking your business to the world.

Founded in 1996, European EMC Products (EEP) has offices and a manufacturing facility in Essex, and customers all over the world.

The business designs, manufactures, installs and commissions shielding systems to protect people and equipment against threats posed by, for example, electromagnetic and radio frequency interference and radiation.

Tim Hedges, Finance Director, describes the business as a global trading company and although Brexit has changed things, it’s not simply about Europe. It’s an international world and if a market becomes more challenging, he reasons, there are other countries and regions in the world to explore. “We trade with New Zealand, Taiwan, the Middle East… the world is accessible to all sizes of business, and we need to trade where we can.”

• Keep an open mind, explore the potential of anything that relates to what you do
• Engage early with your potential customer - visit them in their market
• Differentiate your business - share essential information with your prospect
• Get used to travel – it’s part of trading internationally
• Understand the culture, customs, legislation and contractual practices of your new market
• Explore your trade finance options
• Research government trade support such as UKEF.

“What we’ve learned after trading through Brexit and then the pandemic is that UK manufacturing, technology, design and engineering is held in high regard around the world,” says Tim. “If you’re new to exporting, look over the fence and find out what the global market thinks of your UK product. We’ve been doing it for 25 years and we think it’s worth it.”

Listen to all the insight and practical export tips from this webinar.

We have lots more insight on the outlook for manufacturing and the future of business. Check back in for the date of our next webinar.