Posted on Thursday 13 June 2013 by Ulster Business

Export

The announcement by Mayor of London Boris Johnson last month of an order for 600 new buses from Ballymena manufacturer Wrightbus was rightly lauded as a major success for Northern Ireland exports.

The investment of £200m will safeguard around 220 jobs over the next three years and will see Wrightbus create 50 more positions as production ramps up.

It is the latest success for the bus maker following contracts in markets as far afield as the US, Singapore and Hong Kong.

Boris said the London bus, with components made right across the UK, would send a signal of confidence around the world about what British manufacturing can achieve. He also told assembled local business leaders in Ballymena that their companies could achieve similar feats on the world stage if they believe absolutely in what they are doing.

However, at the same event Wrightbus Managing Director Mark Nodder warned that for all the recent talk about the importance of exports, not enough companies are actually selling into overseas markets.

Quoting figures from the Northern Ireland Chamber of Commerce, of which he is current president, Mr Nodder said only 1,700 – or 2% – of the province's registered businesses are actively exporting.

In fact Government statistics for 2012 showed that just 10 companies account for 50% of Northern Ireland's exports – a figure essentially unchanged from a decade ago.

It is a situation the Wrightbus MD believes must be rectified urgently and with Government help. He joined a British Chambers of Commerce delegation to impress this upon Prime Minister David Cameron in May.

The Wrightbus MD suggested that Government should introduce flexible support such as export vouchers to stimulate new exporters and provide an employment subsidy for those recruiting staff to develop international trade. Such measures would help smaller firms in particular to overcome the fear of making that first daunting move into new markets.

Speaking to Ulster Business following the Mayor's visit, Mr Nodder said: "99% of business in Northern Ireland are by definition SMEs and in fact most tend to be micro businesses, so often the fear of taking the first step is what holds them back. We had a meeting with David Cameron with the British Chambers recently and made the same point – you need to help not just the bigger businesses but also the small businesses."

The Chamber of Commerce last year launched its Export First programme, sponsored by Danske Bank, to help provide knowledge to companies considering exporting. It aims to complement the work already done by Invest NI in terms of helping client companies identify markets and win business, by sharing the knowledge of experienced exporters and signposting where they can go for help.

"A small business may not be on the radar of Invest NI let alone UKTI so we're saying as a Chamber that has a lot of small companies as members, we should talk to one another. Big companies like mine have already hosted mentoring events, invited people in to talk about our sales and marketing plans, how we managed to win contracts in Hong Kong, how long it took, etc. Then we have assigned them business coaches to encourage them," said Nodder.

"Invest NI do super work for the slightly bigger companies in terms of targeting markets and running trade missions. We are saying, for the smaller end, can we not introduce export vouchers, similar to the business vouchers we've seen in the past. You could give companies a voucher for £25,000 or £50,000 but they have to spend it on getting export advice, or export market research, trade missions or hiring an overseas sales person for a year or two years. That would help overcome the trepidation over taking the first step."

Although Northern Ireland is trying to reduce its reliance on public sector funding, Nodder sees no reason a government backed voucher scheme shouldn't be introduced, saying it will pay dividends over the long term.

"I don't think there is a magic bullet solution for this. But look at the economy in the South, it is export driven and it has been throughout their darkest days. They are still creating export jobs because they have an entrepreneurial culture and joined up thinking between government and business," he said.

"You've got to create an environment where enterprise can flourish, so we don't think it is asking too much to ask the government to give a bit of judicial sprinkling of investment just to make the whole thing a little easier."

GLOBAL HEADWINDS

The Wrightbus event came only a day after the release of Invest NI's year-end results for 2012-2013.

In an incredibly positive set of figures which showed the development agency promoting 7,400 new jobs and securing £608m of investment across jobs, R&D and skills, the one negative was exports.

Manufacturing exports were down 2% to around £5.58bn, reflecting the global slowdown and a general lack of confidence.

"Exports continue to be a challenge," Invest NI chairman Mark Ennis told journalists. "We still have a about a dozen companies doing the bulk of the heavy lifting. The way the global economy is at the moment means that companies are not replacing their tyres as regularly, they're not buying new forklifts, they are holding off, and that is reflected in the figures."

The target set in the Programme for Government was for Invest NI to deliver 20% growth in manufacturing exports from a baseline of £5.51bn – an increase of just over £1bn in monetary terms.

A target of 6% growth was set for the first two years and 7% growth in year three and year four. Exports rose in the 2011/12 year to £5.74bn, up 4.3%, before the fall back to £5.58bn this year, putting the agency behind the 6% target.

However, delving deeper into those figures, there is some evidence to suggest there is no need to panic just yet. The numbers don't include sales to GB and don't capture external sales attributable to services.

In fact sales to GB rose to £7.64bn in Invest NI's 2012/13 year from £7.3bn the previous year, and £7bn the year before that.

"What's happening at the moment, for example if you look at construction, those companies are automatically going into GB to make up the shortfall from ROI, but they don't get caught in the numbers," said Invest NI chief executive Alastair Hamilton.

"Our exports to ROI are a third of our total exports (£5.5bn) – last year they went down by 6.6%. GB external sales went up 4.3% (to £7.64bn) in that same time. So the sales to GB massively outweigh any downside, but they are not counted as exports," he added.

"Emerging markets are up 43% over the two year period, our target is 60% over the PfG period so we're on track to meet that target... It is not just as gloomy a picture on external sales and exports as the export number suggests."

Chairman Mark Ennis said the agency is also likely to introduce a survey of client companies to help them quantify the level of service sector export activity, which are currently not captured.

"Our manufacturing sector employs about 75,000 whereas services employs over 200,000," he said. "So there is a major gap in knowledge."

Of course, it is harder for Invest NI to convert opportunities related to trade as closing deals ultimately comes down to the client company's own ability to deliver a result.
But it is not taking its foot off the gas in terms of helping companies prepare for export, with the number of trade missions and exhibitions to increase from 60 to 80 in its 2013/14 year and new people hired in key growth areas such as Asia-Pacific.

While the cost of trade missions has been in the headlines for the wrong reasons recently, it is a strategy Mark Nodder says will be essential in getting more businesses exporting.

"Using Invest NI is the ideal way to research a market and get some introductions to the market. The whole purpose of a well organised trade mission is that in advance the person gets some introductions to people on the ground," he said.

"It is about helping them take those first baby steps. You can't do it by yourself. I've spent my life selling overseas and you can't do it by yourself."

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