South West engineering exporters are flying high in international markets, with 50% of firms generating more than half of their turnover from exports, according to a survey by accountancy and business advisory firm BDO LLP and the Institute of Mechanical Engineers (IMechE).
According to the BDO/IMechE research, the largest overseas market for South West manufacturers continues to be Western Europe (50%). However, the growing success of businesses breaking into China is evident with a quarter now selling goods there.
Over a third (38%) of exporters in the region intend to grow international sales even further in the next five years, with China, North America, and Australia & Oceania highlighted as key markets of interest.
The UK is the 10th largest goods exporter in the world and the vast majority of engineers (78%) believe that it is the quality of UK products that holds the most value for overseas buyers, in stark contrast to price (only 20%).
With product quality being the key to export success, constant innovation and re-invention is the prevalent strategy needed to maintain a seat at the global export table. However, almost a quarter of South West manufacturers felt their company wasn’t spending enough on R&D to keep its competitive position. This is of particular concern given the increasing sophistication of low cost economies such as India and China closing the gap on UK product quality.
Paul Falvey, tax partner and head of manufacturing at BDO in the South West, said: “International trade is the cornerstone of sustainable, long term growth for South West manufacturers. With foreign markets accounting for such a large proportion of sales, it is clear that firms that refuse to rely on domestic markets and invest in their export capabilities are reaping the rewards.
“Despite it still being our largest trading partner, economic weakness in the EU has created significant headwinds for exporters over the past few years placing increasing emphasis on emerging markets. The fact that firms are having problems cracking key geographies is of concern, however China is a good example of how export development can work well.
“The Government must do everything it can to facilitate expansion into these foreign markets, be it through favourable tax breaks to exporters or direct support from departments such as UKTI. Companies must also play their part by maintaining global competitiveness through reinvestment into their business and products. The world is becoming an increasingly competitive place and this pressure is only set to increase.”
Pictured above: Paul Falvey tax partner and head of manufacturing at BDO in the South West