Manufacturing Growth: Look to the emerging markets
PART of the recovery in the manufacturing sector over the last 18 months has been export-driven but as traditional markets stall firms in the Midlands have been advised to look at selling their products further afield.
All this week, TheBusinessDesk.com, in association with DLA Piper and Deloitte is taking an in-depth look at the region’s manufacturing sector and identifying areas of potential growth.
Noel Haywood, partner at law firm DLA Piper, said the turbulence currently taking place within the Eurozone and in the United States was having a harmful effect on the UK economy, especially as 55% of the UK’s exports were to the EU.
As a result of the Eurozone crisis, exports to the region are estimated to have fallen by £1.2bn between May and June this year, with little sign of the picture improving.
Mr Haywood said firms looking to maximise their growth strategies should now be looking to the emerging markets for new opportunities.
“By exploring emerging markets, UK-based manufacturing companies have an opportunity to extend their products/services and diversify their source of sales,” he said.
“In strict economic theory, the weakness of the pound, exacerbated by further quantitative easing, should give UK-based companies an increased competitiveness in export markets, but there is a narrowing window of opportunity for companies to exploit this.”
Some of the best known manufacturing firms in the region – Rolls-Royce; Jaguar Land Rover; JCB and Alstom – are all successful because they have strong export strategies linked to the emerging markets.
The economies of the so-called BRIC countries (Brazil, Russia, India and China) will account for 40% of world GDP growth during 2011 and 2012, up from just 17% in 2010.
Many of these economies are keen to acquire quality UK-produced goods and services, especially in sectors such as automotive and civil aerospace.
However, it is not just these markets which offer potential. The remainder of Latin America, the Middle East, South Africa, Eastern Europe and the Far East all offer good opportunities.
