Doug Mahoney is regional director of UKTI West Midlands and as such represents one of the default resources for small and medium businesses looking to export. “Our help falls into two basic areas,” he explains. “The first is for companies which haven’t exported before or which have done so reactively when an unexpected order comes in. We have a series of professional advisers who will sit down with a company and talk them through the mechanics of exporting.”
This would typically include thoughts on payment systems for export, documentation and an understanding of how exporting might affect a business. “They’d look at what sort of commitment they would have to make; so it’s really preparing them to export,” he says. The advisers work free of charge.
Another facet of this is general advice on areas that need improvement – perhaps an organisation’s website is too locally biased and not yet ready for export or personnel need training in the documentation for export. “We can agree a programme of action and put costs together,” he says. UKTI is not shy of telling a business when it’s not ready to export just yet.
The second area is solid help with finding opportunities in a particular market. “We then help take them out to that market,” says Mr Mahoney. “We do that through UKTI teams in local embassies.” These teams consist of officers from business rather than government staff and they are from the local area. “They will work with local clients to identify what the opportunities are and we have the facility to take the companies out to that market on a trade mission.”
The most common area where people fall down is when they stumble into exporting and don’t plan it as part of their business strategy, he adds.
Mark Lee, head of manufacturing for Barclays Bank, acknowledges that the economy is tough, but says funding is available if the business plan is right. “In really simple terms, there are three things a bank does,” he says. “Obviously funding, also de-risking and then demystifying the whole export process.”
Funding is clearly the banks’ central area and Mr Lee talks about Barclays’ view of the end-to-end working capital solution. “We look at the whole cycle of production right up to export and the time that takes, through to the terms of sale,” he says. “We pick that to pieces and think how we can fund the whole cycle.” Over the last year, he adds, Barclays has put its trade capital and working finance operations together because it regards them as so closely aligned. “In its simplest terms, we provide funding to allow people to expand so they can export.”
De-risking divides into two areas. “There’s the obvious foreign exchange risk of providing goods outside your own currency and we have all sorts of ways of mitigating that risk for corporates. And the second is counterparty risk,” he says. “Inevitably, when you’re exporting you’re dealing with counterparties with whom you’re not familiar, so we use instruments like trade letters of credit and other finance instruments.”
In terms of demystifying the area, he says, the bank uses its network to provide contacts through its own network and offer advice on terms of trade and what can be expected from various international jurisdictions.
It’s easy to get cynical about the banks at the moment; Mr Lee, however, insists funding is happening and when the bank agrees to mitigate something, it is a solid business agreement.
Michael Oliver believes his company, Oliver Valves, is the largest independent valve-maker in Europe, assembling its products in Cheshire and exporting to China and, among other places, Brazil where it has just landed its largest contract to date. Its clients include Shell, BP and ExxonMobil. Formed in 1979, it has forecast a turnover of £65 million for this year, with international sales accounting for some £50 million of that.
Exporting was an obvious way forward when Mr Oliver started the business from his garage. “I thought, if I sell overseas, none of them are going to come and look at my ‘factory’,” he jokes. First steps consisted of leaning on help when available. “Our government has embassies all over the world,” he says. “The first thing is to find which markets you want to target, and in my time I went on subsidised trade missions, and then worked with the embassies in South Korea or Singapore. We found some very good agents and started trading straightaway.”
Finding the right agents in a foreign culture can be daunting. “There are a few ways of doing that,” says Mr Oliver. “One way is that our people will flush some out if you tell them what you’re looking for; another good way is to look at synergistic products. For example, I make valves and next to a valve goes a pressure gauge. So I found out the top pressure gauge manufacturers in France and Italy, and asked whether they’d consider my valves going alongside their pressure gauges. It’s common sense.”
There have been a few lessons along the way; M15 put a block on a recent export to Iran for diplomatic reasons, so you have to watch who you’re dealing with. And Mr Oliver prefers to deal in sterling because he doesn’t want his business buffeted in the euro crisis or any other fluctuation.
Chris Woodhead, managing director of Advanced Actuators, plans to expand his manufacturing company through exports. It currently employs 24 people, turning over £3 million a year. Formed in 1999 from a business with 30 years’ experience in the actuator market, it designs and manufactures a range of electro-hydraulic actuators used for valve, damper and other control applications, and operates in the oil, gas, power generation, coal, steel, water and nuclear industries. It plans to expand to £15 million in five years.
Mr Woodhead says export was a given because its target sectors were already maturing in the UK when the business set up. There were a number of UK firms to which Advanced Actuators were already supplying and who in turn were exporting, he says. “Initially we rode on them and then found out who they were selling to.”
As a specialist business, the company was in a good position to look around for the right buyers by itself once confidence had grown. “We knew exactly where to target and did it ourselves up until about 18 months ago, when we joined the Bradford Chamber of Commerce, which has been very useful in getting the PR in place and helping with the paperwork,” he says. One major lesson has been not to try and target all the sectors to which the business could apply. “You have to get on to people’s preferred vendors list, which takes a lot of time and effort,” he says.
He hasn’t gone to banks or other avenues for advice, but has become involved in another scheme called Rising Stars, a growth programme run by Bradford Council. “We were selected because we make a specialist product, we are exporting and we try to be innovative in terms of customers’ needs,” he says. “Rising Stars has been a help, for example, in guiding us into patenting or copyrighting a product we’re about to develop and with the documentation for export.”
- The cream of UK manufacturing will be recognised at the Best Factory Awards, run by Cranfield School of Management and Works Management magazine, in London on September 28.