Posted on Wednesday 22 June 2011 by Ulster Business

Wrightbus has made buses that are used in Las Vegas

Wrightbus has made buses that are used in Las Vegas

We are told on a regular basis that exports are the future of Northern Ireland's economy and that all businesses should be looking to sell products or services overseas. Ulster Business asked the CEOs of two companies with vast experience of exporting - Wright Group and Sepha Ltd - for their insights into how firms from Northern Ireland can succeed in far flung markets

Dundonald-based company Sepha operates in the global pharmaceutical market, designing and exporting equipment that is used to check package seal integrity, remove tablets from blister packs and to develop blister packs for clinical trails. While it has always had clients overseas since being formed 31 years ago, today 90% of its sales come from outside Northern Ireland and 75% are from outside GB and Ireland. "The company lives or dies on exports," CEO John Haran told Ulster Business. "In the last few months we've had shipments going out to China, Brazil, India - I think last year we exported to around 40 different countries, with orders for small machinery right up to our large machines." The company's sales model encompasses direct sales, an extensive agent network and web sales, and Haran believes this three pronged approach is needed because of the international nature of the pharmaceutical industry. "The UK and Ireland is a good market but it is a shrinking market. Pharmaceuticals has become a global business in terms of people sourcing pharmaceutical products from all over the world. The AstraZenecas and GSKs of the world can manufacture in China and India, so if you want to be supplying products into the main manufacturers you've got to be selling in those countries," he said. The company has used Invest NI's trade programmes to research and visit new markets and Haran advises any company thinking of exporting to invest time and money in development plans for each market they want to go into well ahead of time. "The problem for most people, including Sepha, is that there's a huge amount of opportunity out there. You can't go after it all. You've got to be very focused. We would get 30 web leads a day but the reality is that you have to pick and choose because exports are expensive," he explains. The benefit of having direct sales staff is that they get an early indication of market demand and trends, but Sepha is also utilising the internet to maintain contact with its key customers. "We have given five web demos this month. We did a web demo for a client in China who had their quality assurance team and production team in a factory in China and we ran the web demo of the product from here in Belfast. We then record that and send it to them. We have also done webinars where 50 guys from different countries tuned in to see demos being done in Dundonald. It means you don't have to hop on a plane every five minutes," said Haran. He highlights the advantages of being in Northern Ireland as a strong local supplier network that can process orders for high precision components in a short space of time, the ability to get access to key decision makers, and access to skilled engineering graduates from Queen's and University of Ulster. One downside is the difficulty finding people in Northern Ireland with strong language skills. The Sepha CEO says the company has had to introduce innovative new technologies in its products to remain competitive with rivals in lower cost locations. "You can't compete on cost, the only thing you can compete on is quality and the level of service that you offer. I think we do have a certain advantage because quality and reputation are so important in the pharma industry. The fact we have a product that is proven and a track record does give us an edge there," said Haran. And while its main strength is in the pharmaceutical sector Sepha is also seeing strong interest in its products from the medical device market. "We've hired five new people in the last three months, both sales and engineering staff and certainly we would see the business growing significantly over the next 12 to 18 months. Medical devices would be a big part of it as well as pharmaceutical business. Because of our new technology I think we'll be able to grab a bigger slice of that." Ballymena's Wright Group is one of Northern Ireland's best known manufacturers, but its focus on exports has really ramped up since the recession hit. As the UK and Ireland market fell away dramatically exports to other markets rose from 10%-15% two years ago to 30%, with major contracts won in Hong Kong, Singapore and the US. Managing Director Mark Nodder told Ulster Business that even as domestic markets recover he would like that figure to remain consistently around 25% in future. "After a very lean two years where exports compensated for a fall off in the domestic market, we are now seeing the UK and Irish markets finally beginning to pick up. We have a fairly good order book which gives me a much more optimistic outlook for what remains of 2011 and 2012, although I think it will be another two to three years before we see a full recovery," he said. "We don't have a huge number of markets. We're very focused on the Far East and North America. I would say we are ambitious to grow our markets but we recognised from the outset that there are places where it is very difficult for us to play. Africa and South America are difficult for economic reasons and Europe is tough because there are so many competitors. Every European country probably has half a dozen firms like Wrights. So you need to find niche markets that will allow you to do business without necessarily going head to head with a resident bus company," he added. "Hong Kong and Singapore are good markets for us because both are former Crown colonies with strong connections. British universities have trained many of Singapore and Hong Kong's engineers and they are predisposed to buying high quality buses that are built in the UK. It won't always be like that. Competitors from China and Malaysia are starting to emerge. But at least right now nobody other than Western manufacturers can build the vehicles to the exacting specifications they want." Nodder says it took him three years to really establish Wright Group's credentials in the Far East markets and it has had to adapt to the different requirements of customers there. But once these links were established customers have been very loyal. The company has taken two separate approaches to export markets, shipping some buses from Ballymena fully assembled and others in flat-packed kit form to be assembled locally under the supervision of a project management team. It has also had to spend time understanding the specifications presented by customers, planning, testing and developing prototypes. "The particular challenges for us in our industry are technical and cost. When you go to a new country you are often met with a very different specification for the vehicle. All buses might look the same on the outside to some people, but they are a highly customised product. Generally they are going into service for 17-22 years so they need to be tough," said Nodder. "The other significant challenge is cost competititveness. We are building vehicles in Western Europe with Western European labour rates and selling in markets where those rates are much lower. Probably something like 70% of the cost of a vehicles is in the materials, which is driven by commodity prices. That's a leveller around the world. The rest of the costs are in our labour and management, so what we have to do is be lean and efficient in terms of our manufacturing. We've got to make sure that for our hourly rate we are getting as much value added as possible." The Wright Group MD adds: "Transportation costs are an issue. We have to import materials and export the product. So we spend a lot on the ferries and those services are not inexpensive - it is a very short crossing to Scotland and England but we pay heavily for that. But our overall wage and salary bill compared to other parts of Europe is advantageous." He believes there is no secret to succeeding as an exporter from Northern Ireland, but says any company considering exports needs to be prepared to persevere and make exports a central part of their strategy. "The start point for anyone who wishes to export is making the commitment, because if you are not committed, if you're not prepared to pick yourself up after you've fallen at the first hurdle, then you will not succeed. I know that sounds corny, but it is true. Those who are prepared to keep going, no matter how long it takes, they are the ones that will succeed. It doesn't come easy. Like everything else there is no substitute for hard work."

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