Engineers predict future growth can only be achieved through export

Engineering firms look overseas to grow out of recession

The difficult UK economy is driving engineering firms to look overseas for growth, according to a new study.

However, despite the strong enthusiasm for international trade among businesses in the sector, the UK economy remains too reliant on mature market export partners, the research warns.

“There is clearly a huge appetite for offshore trading among UK producers, eager to defy gravity in tough home trading conditions,” said Cindy Miller, managing director at UPS UK, Ireland & Nordics.

“Economic reality necessitates that businesses do more to take advantage of expanding markets such as Eastern Europe, rather than rely on our traditional trading partners in Western Europe and the US.”

The UPS and Cebr study is based on opinion research amongst 1,200 UK product-based businesses, supported by economic analysis of international trading patterns, aimed at understanding the current challenges and opportunities that exist for UK producers in doing business overseas.

As a result of difficult domestic trading conditions, more than four fifths (87 per cent) of exporting engineering businesses questioned believe that increasing exports will be essential to the UK's economic recovery.

Almost all (97 per cent) exporting engineers believe that high-growth economies will be essential to their company's future survival, growth and success.

The UPS and Cebr study reveals a significant opportunity remains in these regions for exporters, as the UK is still yet to fully capitalise on emerging markets.

UK export growth lags significantly behind demand in the two fastest-growing BRIC export markets – Brazil and Russia, according to the research.

The analysis also shows that only two of the UK’s top 15 export markets were emerging economies (India and China) in 2011, and the country remains heavily dependent on its traditional top five export destinations: USA, Germany, Netherlands, France and Ireland.

Dependence on these economies has decreased only slightly in the past decade, down from 51 per cent of all exports in 2001 to 45 per cent in 2011.

Internationally active engineering firms expect the fastest growth in overseas demand to come from Central and Eastern Europe in the next two-to-three years (as identified by 78 per cent of exporters), followed by the Far East (20 per cent).

Exporting engineers identify physical distance as the single greatest barrier holding them back from selling more to high growth regions (as identified by 97 per cent of respondents), followed by corruption (85 per cent) and underdeveloped legal and regulatory frameworks within these regions (76 per cent).

Indeed, the majority (83 per cent) identify increased ease and reliance of transporting goods overseas as a key export enabler.

Only 3 per cent of engineering exporters describe their company as risk taking in relation to export, and just 6 per cent describe their company as very international in its outlook.

“Exporters must try to overcome perceived hurdles to trading outside of their geographic comfort zones,” said Miller.

“By working with trusted logistics partners on the ground, businesses of any size can develop truly global supply chains.”

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