Funding key to maintaining export recovery

MANUFACTURERS have been making good inroads into export markets leaving the UK better placed to take advantage of a global economic recovery.

According to a report by manufacturers’ organisation EEF UK exporters saw a return to better form in February, which should put an export-led economic revcovery back on track.

A rebound in sales meant that the value of exports of goods excluding oil was up by 6% in the last three months compared with a year ago. Imports grew by 4.4%.

However, EEF believes that for exporters to continue to take advantage of recovering world markets trade support must be protected as part of any spending review by a new government.

Alan Hall, EEF’s region director, said that it was essential that a new administration didn’t “turn off the funding tap”.

“Exporting has now become the lifeblood of UK manufacturers and we are now seeing more signs of an export – led recovery,” he continued.

“But exporting is a team game requiring ambition for manufacturers, a collaborative approach from banks to provide the finance, the right foreign exchange risk management tools and world class export support services.”

According to the survey more than 90% of manufacturers are involved in exporting.

The survey also shows that manufacturers rely heavily on overseas markets with more than 40% of companies deriving more than half their turnover from exports.

Over the past four years further progress has been made in tapping into new, emerging market opportunities especially in the Middle East and Asia with even the smallest companies making progress into overseas markets.

Looking forward, the long term ambition for the vast majority of manufacturers (80%) is to continue to extend their reach into new export markets.

Exposure to a diversity of export markets has helped cushion the blow of the global recession for some manufacturers.

Despite very tough trading conditions, half of manufacturers expanded their exports in the previous 12 months and around a fifth increased them by more than 10%.

Firms selling in to a wider range of markets tended to do much better. Around 40% of firms exporting to nine markets or more showed an increase in sales compared with a quarter of those selling to one to four markets.

More than half of companies have responded to the changed economic environment by rethinking their export strategy.

Despite this a number of hurdles stand in the way of them taking full advantage of a recovery in global markets, particularly uncertainty around exchange rates and recent sterling volatility.

In addition, problems remain with insurance cover. In response, EEF is urging the banks to work more closely with exporters to make sure insurance, other foreign exchange products and tools are available that cater for a broader range of exporter not just the largest.