UK engineering companies heavily dependent on export markets

More investment needed to defend reputation for quality, finds survey

The largest overseas markets for UK manufacturers were Western Europe (75%), followed by North America (54%), according to the survey of UK engineering and manufacturing executives by accountants and business advisers BDO LLP and the Institution of Mechanical Engineers (IMechE). The growing success of businesses breaking into China was also illustrated with just under a quarter selling goods there, the third largest single market for UK firms.

Two regions which are proving difficult for manufacturers are India and South America, with only 8% and 12% of companies exporting to these destinations. However, more than a quarter of companies are targeting these regions for future trade. In contrast, Africa is an area that holds limited interest for firms with only 11% exporting there and only 12% intending to make the continent a target in the future.

The UK is the 10^th largest goods exporter in the world and the vast majority of engineers surveyed (78%) believe that it is the quality of UK products that holds the most value for overseas customers, in stark contrast to price (20%). However, 28% of those surveyed felt that their company wasn’t spending enough on R&D to keep its competitive position. 

Tom Lawton, head of manufacturing at BDO, said: “Economic weakness in the EU has created significant headwinds for exporters over the past few years placing increasing emphasis on emerging market so the fact that firms are having problems cracking key geographies such as India and South America is of concern.

“However, China is a good example of how export development can work well and 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. However, 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,” he added.