Central South: Engineering exporters flying high but more investment needed, says BDO

Engineering exporters in the south are flying high in international markets, with 38% of firms generating more than half (56%) of their turnover from export markets, 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 manufacturers in the south continues to be Western Europe (78%); however the growing success of businesses breaking into North America is evident with just under half (44%) now selling goods there.

Two thirds (67%) of exporters in the region intend to grow international sales even further in the next five years, with Eastern Europe, China and South America being 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, nearly half (44%) of South East manufacturers felt that 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.

Arbinder Chatwal, director and head of manufacturing at BDO in Southampton, said: “International trade is the cornerstone of sustainable, long-term growth for manufacturers in the south.  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 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.”