Supply Chain Risk: Exporting champion PEGL gives guidance

A GLOBAL engineering group which exports to 45 countries, has emphasised the importance of building good relationships with businesses in order to be a successful exporter.

Sheffield-based President Engineering Group (PEGL), formed two years ago following a management buyout of Conflow and Bestobell Valves from their former parent Flow Group. The deal was backed by YFM Equity Partners.

In December 2012, PEGL bought probe and monitoring equipment business Bretby Gammatech and was backed by Lloyds Commercial Banking.

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Marie Cooper, finance director at PEGL, said building strong two-way relationships can really help to mitigate much of the risk a business might come across, when dealing with overseas suppliers.

When PEGL was first formed, following the MBO, Cooper said a number of suppliers gave the company the same terms as the old business, despite it having a low credit rating.

She said: “It’s about building the relationships and being honest.They continued to trade with the terms we had previously we had previously and were very supportive. It’s a two-way relationship.”

Bretby Gammatech supplies equipment used in more than 20 countries to analyse the quality of coal to strengthen its presence in the mining sector. The Bestbell Valves business serves the oil and gas sectors.

Cooper said: “All our companies serve the energy sector but serve very different markets. The production process can be similar but the assembly process is different.”

Within the 45 countries PEGL exports to, it has to manage very different risks in each market.

Cooper said: “Russia and India are key markets for the business but bureaucracy is a risk factor. Having good agents and customer relationships mitigates that risk.”

The group uses three suppliers – two in India and one in China, which Cooper said have “come a long way” since they started working together five or six years ago.

She said: “The suppliers we use are well placed but we have to manage them closely. Due to overseas locations, travelling is required to enforce the quality.”

She also said that China is a risk from an intellectual property point of view.

“We have seen copycats but we do have protection because of our high quality and because it’s a niche market,” she said.

The company predominantly uses invoice discounting and moved to Lloyds Bank to have the facility extended to 85% of exports, it also uses an overdraft facility.

Relationship director Adam Barraclough says: “Mid-sized businesses like PEGL are fundamental to the long-term health and prosperity of the UK. We are committed to providing them with the funding and support needed to capitalise on new opportunities.”