After the Prime Minister triggered the UK’s exit from Europe there remains a spirit of resilience and lack of panic in the North, finds Mike Cowley
In the wake of triggering Article 50 leading to Brexit, there is little obvious sign of panic amongst Northern exporters, more a sense that any threat must be weighed against the opportunities offered by an increasingly accessible global market.
This is not surprising when all available data points to exporters as a group being more resilient to both domestic and overseas fluctuations in demand because they spread their net more widely and aren’t reliant on their products selling in a single market.
It also reveals that compared with companies who have yet to export, they are more profitable, grow at a faster rate and are more innovative and adaptable, being three times more likely to introduce a new product or service.
It seems then that the act of exporting is in itself a game-changer.
Even following the bank crash generated recession, a survey of exporters in Yorkshire and Humber by the Department for International Trade team found that one third had never had it so good, one third said it had made no difference and the final third reported steady growth.
All this and more was revealed at the Super North in The Times Forum held in the offices of Deloitte in Leeds in the week before Article 50 finally got the green light – a Forum attended by both active exporters and key players from the bodies that represent them (see panel).
Chaired by Alasdair Nimmo, publisher of Super North, the Forum proved a positive platform for exporting, clearly revealing that the overseas market does not begin and end with the remaining 27 members of the EU.
In fact, neither of the two high profile exporters on the panel – Denny Maude of Quality Bearings Online and Becky Ayres of Liverpool Sound City – are reliant on Europe for their success.
Quality Bearings Online reported sales of just £250,000 in its first financial year after being founded in 2012. Since then it has doubled its turnover annually and has achieved more in the last three months than it achieved in the previous nine.
Whereas it now exports to 79 countries, much of this success has been down to the US market where it has customers in all 50 states and recently sold bearings to NASA.
Optimism for global sales
“It is more exciting to sell bearings to Boston than it is to Barnsley,” says cofounder Denny Maude.
The Forum heard a similar story from Becky Ayres, the Chief Operating Officer of Liverpool Sound City, which has become a leading player on the international scene by effectively exporting their home city’s cultural music heritage through organising a series of festivals and music business events overseas.
Launched in 2007, the company’s first venture saw it taking its Best In the North West showcase to South by South West (SXSW) in the US, the world’s largest music industry event. The Wombats, then a relatively unknown band, travelled with them as part of the Liverpool package which resulted in them being signed by Warner and Atlantic Music. Also on the gig was Sentric Music, a Liverpool music publisher – and at that time a business start-up – which handles artists on a non-exclusive basis, which last month received a £3 million cash injection to expand.
Asian markets beckon
While Liverpool Sound City soon afterwards went on to hold events in Manchester and Liverpool, they have never taken their eye off opportunities overseas. They now export artists and events to the boom markets of Korea – the Koreans have apparently taken over from where the Japanese were in the 80s in embracing Brit music – to China, where they have just had a major investment from Modern Sky Entertainment, the country’s largest entertainment company with over 53 festivals annually and an audience of 20 million.
“It can be risky but it has proved worthwhile not only for us but for the companies we have worked with,” says Becky Ayres. “Sentric started off with two people – now they have 30 – that’s what exporting does for you.”
Looking further afield
Another panellist with direct experience of the issues of running an export based business was Colin Bell, currently the Business Growth Director of the North East LEP. He was previously owner of Winning Moves, a software business which licensed its products into 27 countries including Africa and Asia and then providing training, before it was sold.
“The world started to feel quite small as a result,” he said. “The reality though was we would have gone out of business if we didn’t look further afield had our UK and European market disappeared overnight. That’s where I learned the lesson that it’s not just about growth but building resilience into your business.”
And looking further afield was exactly what Mark Robson, the Yorkshire and the Humber Regional Director of the Department for International Trade advocated at the Forum.
He pointed to Brazil as his “favourite” example of an opportunity market.
“We built all the railways in Brazil but then we kind of forget about South America. It has been almost impossible to get firms to look there when there has been so much on their own doorstep.
“In some ways, what is happening is making people look more widely, so it is an exciting time in terms of opportunities.”
But how good is the UK at exporting, asked Forum chairman Nimmo?
“We perform pretty well but could do better,” said Mark Robson. “There are a lot of businesses out there who could do well internationally but don’t. One of the reasons is we are an island which gives us a different mentality than say the Germans who look on exporting as putting it on a truck and trundling it down the road.”
Meanwhile Nick Marsden of Deloitte, an international and corporate tax partner based in the Yorkshire and North East practice with over 20 years of experience, understandably took a more measured view in terms of Brexit.
“Naturally there have been quite intensive discussions going on,” he says. “A lot of groups are taking the view they need to do their homework and see what the potential implications are for them particularly in terms of areas such as supply chains.
There has been a lot of modelling. Many groups are taking the view of hoping for the best but planning for the scenario of maximum change.”
And the opportunities are there even for the smallest companies. Colin Bell cited the example of Blue Kangaroo, a firm in the North East which happened to send off an email to Disney Pixar in the States offering their services.
“The following week they were on a plane out to Los Angeles,” he said. “Those are the opportunities out there.”
Leeds company keeps firm bearing on opportunities of global trade
When a ferry which provided one of the lifelines to a group of Southern Caribbean islands was brought to a halt because vital engine bearings had given up the ghost, it was a major emergency for the islanders.
Fortunately help was at hand but from a small company based thousands of miles away in the Bramley district of Leeds whose staff would have struggled to locate the problem area on the map.
Quality Bearings Online does not need to know where its customers are, as its products are delivered anywhere in the world via DHL– and the ferry part was flown out the next day.
This was back in 2014 and was the first export order the company had ever received but certainly not the last as it now ships to 79 countries worldwide.
It was this order though that made QBOL think seriously about the potential of overseas and saw them head for help to the Yorkshire and Humber regional team at the Department for International Trade. And they have been working with them to achieve their success story (see main article) every step of the way since.
The company also received a significant boost when they made the cover feature in the last Export edition of Super North in The Times, which was sponsored (as is this one) by the Department for International Trade.
“Our story appearing in The Times opened a lot of doors for us, particularly in the States – now our main market – where coverage in the paper is almost like having a Royal Appointment to the Queen” says Denny Maude, co-founder of QBOL. “And that platform was provided for us by DIT.”
The first step to serious exporting for the company though was to attend a six-month training course and be provided with a DIT mentor to help ease them on their overseas trade journey.
“That same representative is still with us and we certainly wouldn’t be where we are today without her,” insists Denny Maude. “She sits in on all our monthly management meetings and is a true member of our team.”
Apart from her day to day advice, the mentor has even saved QBOL a significant amount of money by monitoring changes in import regulations in America.
“We used to be able to get bearings worth under $200 into the US free of duty. However unbeknownst to us, that was changed to under $800,” recalls Denny Maude. “If she hadn’t spotted that we’d have been paying duty over $200 for a considerable time.”
Yet another exporter to wax lyrical about the help her company has received from DIT was Becky Ayres of Liverpool Sound City, now a global player in music events and festivals as far afield as South Korea and China.
“DIT helped us develop the model to take our events overseas,” she says. “They have been a massive resource for us offering local knowledge, advice and expertise.
“When you start out you feel as though you are in a boat on your own but when you hook up with DIT all that changes. Now we are lucky enough to be asked to be an Export Champion for the North West and fly the flag for them. It’s a humbling opportunity.”