The strongest SMEs in the wider Birmingham region are exporting to generate growth – with most of those companies specialising in advanced manufacturing or engineering, according to new research.
The findings from a survey by Marketing Birmingham Regional Observatory and the Greater Birmingham and Solihull Local Enterprise Partnership (GBSLEP) found that despite the success of exporters, only one in four (25%) SMEs are operating in overseas markets. The research uncovered that close to half (48%) of SMEs were focused predominantly on the West Midlands region with a quarter (25%) generating most of their turnover across the wider UK.
1,700 businesses across the GBSLEP area and the Black Country were surveyed. The report is available to download from the Marketing Birmingham website.
The research examines which SMEs are experiencing the most growth in areas such as turnover and employment, and how this has been affected by factors such as exporting and business support.
It found that SMEs with a UK or international focus are more likely to be growing than businesses consolidating locally. While 43% of companies focusing on local markets have experienced a reduction in turnover or staff over the last three years, this is a problem faced by only a third (31%) of SMEs operating in a UK market and just over a fifth (21%) that are trading overseas.
Businesses in the West Midlands exported £20.2bn of goods and services during 2011 – compared with £17.5bn in 2010 and £13.6bn in 2009, according to HMRC.
Neil Rami, Chief Executive of Marketing Birmingham, which operates the Regional Observatory, commented: “Many of the region’s most successful SMEs are our most ambitious, looking further afield to find new customers. This has a knock on effect with evidence also suggesting that higher export levels raise the prospect of attracting further inward investment to the region.
“It is clear that smaller businesses wanting to achieve growth in their turnover, and that have the means and ability to approach foreign markets, should consider exporting in addition to strengthening their positions in the UK.”
As expected, when analysed by sector there was considerable variation in the proportion of SMEs that exported. Building on the strength of manufacturing in the region, worth more than £15 billion annually to the local economy, SMEs in this sector that are operating abroad are experiencing the biggest increases in turnover and recruitment.
While more than half (52%) of advanced manufacturing and 38% of engineering SMEs export, just 6% of construction firms focus on overseas markets. Furthermore, the sectors with the most SMEs deemed ‘high growth’*** were in exporting industries – advanced manufacturing (30%) and engineering (26%) – while nearly half (41%) of SMEs in construction experienced a downturn in employment or turnover each year in the last three years.