The story of Webster Griffin, a manufacturer of specialised bag-filling machinery based in East Sussex, typifies how support from UK Export Finance is boosting UK supplies for overseas projects.
Webster Griffin manufactures specialised bag-filling machinery, designed for packaging and transporting commodities such as plastics, chemicals and food on an industrial scale.
Its largest market is India, thanks to its repeat business with Reliance Industries, India’s largest publicly listed company.
In 2016, UK Export Finance (UKEF), the UK’s export credit agency, provided Reliance with a £300m line of credit to help fund construction work on its refinery in Jamnagar.
Crucially, UKEF financing was provided on the condition that Reliance sourced goods and work on the project from the UK. This resulted in more than 100 additional opportunities for UK companies, including Webster Griffin, which received a £700,000 export contract supplying the UKEF-backed Jamnagar project.
This represented significant revenue for Webster Griffin. However, each of its machines are custom-designed and take over a year to make; the delay between winning, delivering and getting paid for a contract can put pressure on the company’s cashflow.
Reliance offered an advance payment to help finance the cost of staff and supplies, but requested advance payment and performance guarantees in return. Such guarantees provide security for overseas buyers and are a common requirement for securing export contracts.
While Webster Griffin’s bank, HSBC, was willing to issue the guarantees, the deposits required in return would have tied up the company’s cashflow, which it needed to fulfil the contracts.
Fortunately, UKEF was able to help with this as well. Under its Bond Support Scheme, UKEF guaranteed 80% of the value of the advance payment and performance guarantees, allowing HSBC to issue the bonds with reduced deposits.
Mark Wilson, Director of Webster Griffin, commented: “Working with UKEF has been incredibly easy and has helped us secure millions of pounds’ worth of export contracts. Its support is so valuable to UK companies with a strong international focus like ours.”
Thanks to UKEF, Webster Griffin was able to hold onto vital cash, which it could use to pay its staff and suppliers prior to completion, securing hundreds of thousands of pounds’ worth of revenue and supporting around 50 jobs in the South East and around the UK.
You may also be interested in this article, which explains the difference government-backed finance can make.