As the economy regathers pace, Henry Anson highlights the attitudes towards reinvesting, business development and marketing in the industry. It follows an online gathering co-hosted with industrial marketing and business development specialist Intergage.
The Manufacturer’s latest Directors’ Forum online gathering – co-hosted by B2B digital marketing agency Intergage’s managing director Paul Tansey – brought together business owners and managers from across the country to discuss major challenges and opportunities faced by the manufacturing sector.
This gathering will inform a future survey on manufacturers’ attitudes towards business development and marketing. It looked specifically at the group’s attitudes towards:
- maintaining cashflow vs reinvesting
- adapting business models
- agility in maximising new opportunities.
There was a consensus across the group that reinvesting cash into businesses would be the fuel that drives British manufacturing forwards.
That said, there were feelings of frustration around the UK government’s ignorance of the challenges faced by manufacturers – and the effects that Brexit will have on the industry.
Maintaining cashflow vs reinvesting
The overarching feeling was that reinvesting was key. Investing in people, machinery, new skills, marketing and business development during a time of great change is what will drive businesses forwards. Businesses that are changing at a slower rate than the world around them are already going backwards.
There was also recognition that – for manufacturers – market share is key. Even in a shrinking market, businesses can still grow by gaining market share, and disruption is an ever-present threat. There was a feeling that if you’re not willing to reinvest and disrupt the market, you risk being disrupted or even completely displaced. That is something previously touched on here.
Cashflow, of course, is of equal importance to market share. The managing director of a leading Cumbria-based manufacturer felt that while cash was king, the message to conserve cash and curb spending needed to change at a government level. Cash should be saved but reinvested in businesses to push the industry forwards.
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Throughout the discussion, the group referred to a Harvard Business Review report based on a study of 4,700 companies before, during and after recessions.
The report clearly showed that progressive firms that balanced marketing and reinvestment with cost saving and enhancing processes for efficiency came out on top after the last recession. They enjoyed an average of 37% for both top- and bottom-line growth.
I feel that there is a chance for manufacturers to see this as a time of opportunity in the medium term. By investing now in R&D, marketing, skills and assets that add value, businesses can position themselves to take advantage of the growth on the other side of these troubled times. An opinion I share with Intergage’s Paul Tansey.
Keeping supply chains moving
If manufacturing is the heart of the UK, then supply chains are the vital arteries keeping everything alive. One question posed was how to keep revenue flowing through the supply chain – particularly if customers aren’t paying on time (to preserve their own cashflow).
It was eloquently put by the managing director of a leading Scottish engineering company that the world relies on credit…and that credit relies on credibility. As soon as the credibility is taken away, the system falls apart. It is crucial that the larger suppliers and OEMs consider this.
Larger businesses stockpiling cash – and the resulting implementation of pro forma invoicing throughout the supply chain – could clog the vital arteries of business. The group believed that keeping cash flowing through the supply chain was vital – and that this would demonstrate enlightened self-interest on the part of some of the larger OEMs.
Agility to maximise new opportunities
Businesses have been forced to adapt to new, agile ways of working in the last six months (for obvious reasons). The opportunities created by virtual working and networking was a subject that split the group.
Some felt that while existing relationships could be maintained (and even improved) through the virtual space, the same was not to be said for building new relationships.
Some felt that it was difficult to get the ‘closeness’ achieved in face-to-face meetings when using tools such as Zoom – and that building new relationships relied on an element of social contact and face-to-face meetings.
Others felt the virtual space opened new opportunities to become more productive, to speak with suppliers more frequently and to make smarter investments. It was felt that there may be a generational divide on the issue with millennials adopting virtual meetings more readily than previous generations.
Through efficient use of technology, sales staff can attend twice as many meetings as before and view online exhibitions without needing to travel – while also being more selective about which events they attend.
The decreased spend in travel and face-to-face events is significant for businesses. This report reveals that, by the last week of March alone, travel expense claims alone were down by 40% year-on-year.
This provides businesses with more opportunities to reinvest the cash saved. They can drive sales and lead generation through new digital and inbound marketing methods – something Paul is naturally very passionate about.
Ultimately, it was agreed by all parties that the future would not be completely virtual. Success requires a blend of activities customised to the attitudes and needs of those on the buying end of the conversation. There are many who feel that a ‘Zoom’ call is no replacement for traditional face-to-face relationship building.
Adapting business models
With everything that has happened in the past six months, UK manufacturing has demonstrated an agility and an ability to take decisive action that provides great hope – from switching focus and producing new products (such as ventilators) to taking advantage of the opportunities available through the Peppol e-procurement system.
The group agreed that not making decisive changes would amount to going backwards.
One Leeds-based manufacturer of medical equipment spoke of the benefits of finding new markets in the NHS and the Ministry of Defence. Using the Peppol system presented a huge opportunity for B2B organisations to explore new opportunities.
Others were not totally convinced, with fears that some businesses would not be able to access the system and that others would not gain approval to be on it.
Implementing an international sales strategy was also something the group discussed passionately. One business was already well advanced with 70% of its business in international markets. It expounded the virtues of putting in the hard yards (and the air miles) to forge relationships abroad.
While concerns were expressed by some members of the group about the future difficulties in serving overseas markets – including challenges associated with a no-deal Brexit and meeting new standards in new markets – all group members agreed that international markets presented significant opportunities.
Some felt that the UK’s credibility abroad has been impacted by Brexit and the ongoing threat posed by COVID-19 – and the UK’s slow reaction to it.
An insightful and invaluable session
This was a particularly insightful session and one that will be invaluable to understanding the manufacturing industry’s attitudes towards marketing and business development following the Covid-19 pandemic.
There were frustrations around the UK government’s lack of understanding of the manufacturing industry – coupled with anxiety about finding the balance between reinvesting and preserving cash. But there were undoubted positives.
Britain is a nation of manufacturers and innovators. Brexit and Covid-19 may present huge challenges but companies which continue to reinvest and create brilliant products will always have a market.
Digital marketing has made it easier than ever to find a target audience in any market, anywhere in the world. ‘Made In Britain’ still counts in many parts of the world; British brands are still in demand and we have many friends – but now is not the time for complacency.
UK plc’s influence has waned due to Brexit. Meanwhile, our international competitors are strong, forward-thinking…and no longer in awe of our industrial strength.
British manufacturing firms must innovate and invest in marketing – building their brands as much as their production lines to compete. Indeed, the group agreed that the current challenges may well be the stimulus that British manufacturing needs to evolve, adapt, and sharpen up to meet the international challenges ahead.
If you would like to attend a future ‘virtual’ networking session, please register your interest via firstname.lastname@example.org
*All images courtesy of Shutterstock