James Pozzi reviews some of the key discussions at the 2nd Annual UK Trade & Export Finance Conference, which took place in Birmingham this week.
Birmingham’s Hilton Metropole hotel played host to the 2nd Annual UK Trade & Export Finance Conference. Following 2013’s inaugural event, which played host to over 250 delegates, this year’s event saw a similar numbers converge on the second city. Encompassing a mix of individuals from business, banking and insurance backgrounds, the event offered panel discussions and interactive-driven debates. It also offered expert insight into business opportunities and investments for manufacturers in different global regions. With such eclectic and expansive offerings on show, I’ve compiled a snapshot of some of the discussions taking place on the day.
Second time round
To mark the start of the second UK event, the day started with an opening speech from Peter Gubbins, managing director of Exporta, one of the organisations overseeing the day-long conference. In his address, Mr Gubbins told the crowd it was a good time to be back in Birmingham and the wider Midlands region as the face of the UK economic landscape was in the midst of an upturn. “Looking at all the very positive manufacturing figures along with government and private company initiatives to help UK exporters, there’s certainly a big buzz around,” he said. With an emphasis for delegates to maximise everything on offer, the shortage of knowledge from authorities on export wasn’t in short supply.
The West Midlands in the driving seat
One of the most eagerly anticipated speakers of the day was event keynote Professor David Bailey of Aston University, an expert on economic restricting and industrial policy. As a renowned voice on car manufacturing in the West Midlands and the UK, Professor Bailey discussed the region’s resurgent automotive industry in depth. With the UK economy expected to grow by 3% this year, growth so far has largely been consumption led with confidence returning to business.
“This growth has been a long time coming,” he said. “Compared to every other recession over the last 100 years, this has been the slowest recovery on record.” Government policy is another factor he argued was working, after Chancellor George Osborne postponed deficit reduction targets towards the end of 2012 and introducing initiatives such as Funding for Lending.
But challenges remain. For starters, there is the UK falling behind in its R&D investment and a lack of any coherent industrial policy. Lending to SMEs and factors such as real income being squeezed also remain areas of concern. Professor Bailey also believes a reform of the UK’s banking system is also needed to support long-term growth. “We still need to reform the banking system, with a better separation of utility banking system lending to companies against the casino capitalism part of banking,” he said. “This can only come from the separation of ownership.”
The age old problem of skills was also touched upon. Professor Bailey said this is something that could be remedied by incentivising the likes of Jaguar Land Rover, JCB and Rolls-Royce. This would lead to the companies training far more apprentices than they need, before realising them into its supply chain, thus benefiting other companies working with the larger OEMs. The underlying message was one of cautious optimism. Things have improved, but in order to continue this, there was still plenty that needs doing differently.
Switching his focus to the West Midlands as a region, Professor Bailey gave an overview of where it stands and where it might be headed. Private sector growth needs supporting in its cities, given the region’s poor track record on investment infrastructure.
With the de-industrialisation brought about by a spending focused overwhelmingly on London, this has led to a lack of jobs being generation and the generation of jobs and developing a knowledge economy. This has led to a region relying too heavily on the public sector to develop knowledge intensive jobs, resulting in the West Midlands taking the biggest hit of any region in the UK when recession hit. A stark reminder of this was the statistic that during the last Labour government of 1997-2010, West Midlands manufacturing declined by 23%.
But the bounce back is happening rapidly, in part led by manufacturing growth. This is something Professor Bailey puts down to the reshoring effect. Exports are up 30% in the last two years alone, something that without the region, the UK’s whole export figures would have gone backwards, argues Bailey. The number of companies exporting beyond the EU has also increased to 55% to the likes of North America and China.
An example of this is Jaguar Land Rover, the West Midlands-based automotive maker which sees the majority of exports go beyond the EU. China aside, newly emerging countries such as Mexico and Indonesia with growing middle classes are also becoming lucrative markets. The region is awash with medium value companies, and upgrading this middle to premium levels is a challenge.
But JLR lead the way in this, with the average value of premium car making has risen by 30%. Bentley is another example, where the consumer can even design the cocktail cabinet that goes into their car, illustrating more personalised products. Manufacturers across a range of industries are following suit, strengthening links between creative and non-creative sectors.
Manufacturing in Africa
After a networking lunch which saw me sat between an individual from a large global bank and an SME manufacturer based in Stockport, a selection of seminars focusing on regions to invest in made up the lion’s share of the afternoon’s coverage. I fulfilled my natural curiosity by attending a seminar on investing in Sub-Saharan Africa.
With discourse from the likes of UKTI and other export organisations focused on the potential of the BRIC nations (Brazil, Russia, India and China), the notion of investing in the African continent was intriguing. Investment stories have become common place, particularly from China buying up resources multiple countries, and most recently, GlaxoSmithKline investing $130m into its African manufacturing operations.
With its vast natural resources starting to show a semblance of economic growth, the turnaround in the continent dubbed by Time magazine in May 2000 as “The Hopeless Continent” have been steady. It was also Time magazine in March 2013 who changed tact with “Africa Rising” adorning its cover, offering an illustrative bookend of its emergence. Magazine covers and investment clichés aside, what are the cold hard facts?
On hand to offer this to a packed out room was Gaimin Nonyane, senior macroeconomic specialist at London-based Ecobank International. Ms Nonyane began with a telling statistic: 82% of Africans feel they will be better off in the next two years, a reversal of figures from other continents such as Europe and North America. The growth transformation of the continent has been boosted by numerous factors. According to the FDI Influx data of 2012, $40bn more investment arrived than in previous years. But the industrialisation remains weak. Manufacturing only accounts for 30% of African productivity, in contrast with Asia, which stands at 45%.
Nonyane said the continent is ripe for UK companies to take advantage of its potential, but this would mean considerable investment. But the markets are there for this. Opportunities include food processing, pharmaceutical, textiles and leather products. Another interesting detail on African progress is regulation. Mauritius currently stands as the continents biggest regulation reformers, while the likes of Ghana has also risen considerably in recent years. Such changes can only lead to more business friendly environments for foreign exporters and investors, said Nonyane.
As the event drew to a close, it provided the chance to reflect on the day and what such an event depicted. As is something I encounter so regularly as a manufacturing reporter, there is an appetite from all facets of UK industry to export. But confusion over how to best maximise this while hittinf the right regions and markets persists. With moves from the likes of UKTI and other export bodies offering the right guidance over shipping goods, dealing with foreign suppliers and navigating regulations, then the UK is in prime condition to mirror its domestic resurgence further afield. With that £1trn by 2020 target looming ever closer, the next five and a half years prove to be a fascinating time.