Present: Andrew Calvert Lancashire Business View Ian Parker UKTI Ed Murphy Chamber of Commerce Elaine Hurn Taylors Solicitors Stephen Anderson PM&M Chartered Accountants Stephen Sadler Nortex International John Wilkinson Cloverbrook Group Andrew Turner Langtec Tim Helliwell HSBC Steve Estill HSBC

International trade is vital to the Lancashire economy, sustaining tens of thousands of jobs and creating real wealth. Lancashire Business View brought together some of the county’s leading experts at HSBC’s Lancashire Commercial Centre to discuss how businesses are faring in an increasingly global marketplace and how they can continue to stay ahead of the competition.

How important is international trade to the county’s economy?

Ed Murphy: All the people who deal with inter-national trade – importers as well as exporters –make a direct contribution into the living standards of every single person in the country. Within Lancashire over the last couple of decades or more, we have lost many of the major manufacturers that we used to have. The bulk products that were made have, to a large extent, gone overseas or even disappeared. What we have left are companies which are looking at technologically developed products that are high in quality.

Stephen Sadler: The companies which have succeeded most are the ones which have been prepared to innovate. What we are seeing now are the smaller, medium-sized companies which are now saying to their customers: “What would you like our equipment to do?” And by doing that, they are successfully competing against the Chinese and the Indian markets because they can offer degrees of flexibility that just aren’t available when you are mass producing.

Why is UKTI changing the emphasis in its business support programme to R&D-inten-sive companies and larger businesses?

Ian Parker: We recognise that companies need to innovate and grasp new and developing technology and UKTI is supporting them to do that. Many of them are manufacturing companies and will ultimately manufacture products both here and overseas. We have got to grasp the new areas in terms of nano-technologies, chemicals, bio-technology – areas that offer potentially high value to this country. These are the areas we feel are going to drive us forward to capture the new markets in China, India, Russia and Brazil.

How has Cloverbrook managed to achieve a blend of volume production while developing high-tech fabrics?

John Wilkinson: Our company has had to respond to changes in the global textile industry. It is no secret that a lot of the manufacturing industry is gravitating to the Far East at the dictate of the global brands which are looking for cost savings. Our response has been to understand the areas of the business where we add value and identify those activities which we can continue in the UK. We have also had to learn and develop the skills to manage a supply chain worldwide so that we can still have a healthy place in the textile business.

How can banks help SMEs into international markets?

Steve Estill: Companies wanting to remain competitive need to look at new opportunities around the world and that is where we come in. We have various systems within HSBC which allow us to make direct contact with our opposite numbers in other countries around the world and to introduce people directly. We also have information at our fingertips about all sorts of different countries in terms of local etiquette, social ways to operate in that country, etc.

John Wilkinson: HSBC has been very helpful in us developing successful operations in Sri Lanka and Egypt. We use exactly the same banking systems so that when I look at my accounts each morning, I can look at what my accounts are in Cairo and Colombo as well as in Burnley.

What support can the chamber movement provide?

Ed Murphy: Chambers of commerce are effect-ively owned by businesses so we have to meet the needs of those businesses and we provide a range of support and services from extremely good international market research, to providing advice and mentoring. At the moment we are about to fill a gap in a company where they have had the expertise to develop a product, but they’ve got no selling skills whatsoever. We are going to work with them over the next five years – they will use the sales skills at the chamber and during that time we will actually train and develop the company so that their staff will be able to sell and grow the company even further.

Is the strength of the pound damaging the potential for export?

Stephen Anderson: That is the feedback that we have been getting from SMEs involved with international trade. One aspect that we might consider is how business support networks are actually geared to deal with and assist businesses, particularly SMEs which don’t have the big resources of larger organisations. Increasingly, we are seeing the transfer of the process side of businesses over to the less expensive labour markets, while keeping the intellectual property here. That is where companies need help to make sure that the design and the product improvements they are coming up with actually manifest in a product which comes back from wherever they are having it manufactured and satisfies their marketplace.

Tim Helliwell: Going out to see clients who are going into international markets for the first time, it is very interesting to know whether they have tried to do their own thing. We always explain to them that they should be looking for the help that is out there. One of the issues around the table is to get the message out that there are places that you can turn to for help.

Elaine Hurn: One of the things that some of the SMEs don’t do is to protect their innovation and designs before they go into the market place. Some of them go to trade exhibitions where they get ripped off by somebody who says “I can do that” and their great idea has gone. What one or two local companies have done is to outsource the manufacturing of fairly innovative products and come a cropper because the local people say: “Well, we can do that, we don’t need to have a relationship with you.” They haven’t protected the relationship with a sole exclusive appointment or a joint venture.

Andrew Turner: We are good at manufacturing products but we’re no good at the rest of it so we employ experts to do all that for us. It’s okay having support but if you haven’t got a desire to go out and do these things, nobody will do it for you. Now, 80 per cent of our business is overseas, but the desire for us to export abroad came from us.

Steve Estill: No matter whether you trade internationally or domestically, it does need to come from the business owners. At the same time it’s no good if you want to do it and you can’t get the support.

Ian Parker: The core of businesses wanting to export is still relatively small. In the UK and in Lancashire, it’s still only round about ten per cent of companies who export and most companies look at export and think it is too difficult for me, which isn’t the right attitude. We have got to approach it as we would any market expansion programme. UKTI can help them get contacts overseas via our embassies, can help the company arrange appointments with those contacts, go out with the company to the particular meetings and hold their hand.

How can Lancashire companies attack global markets?

John Wilkinson: Obviously, there are soph-isticated financial instruments that can help, but I think it’s broader than that, it’s having a network of support – both in this country and overseas – on the legal side, cultural side, employment side and many other dimensions that will give you that comfort factor. Looking back over the last five years my company has changed from being a traditional UK manufacturer to being a marketing design development company that can manage supply chains worldwide.

Tim Helliwell: One of the issues is where do you export to and what’s the risk of that particular country? Many people look at Nigeria as a market and don’t do business because it’s so difficult but, if you understand the market, understand how they do business, use the right financial tools, you can make an awful lot of money.

Stephen Anderson: It would seem that the east Lancashire economy is suffering because there is reluctance amongst businesses, small businesses in particular, to do international trade. The difficulties are obviously surmountable, but many businesses are stepping back from leaping into what, they see, as an abyss because of a lack of knowledge.

Ian Parker: We are spending a lot of money promoting international trade. A lot of companies start off international trade by importing and we have got to recognise that as part of the UKTI organisation. We have got to recognise that importing isn’t necessarily a bad thing, it is part of the progression of a business’s growth.

Could and should UKTI do more to support international trade?

John Wilkinson: I’m sure it could and the statistic that only ten per cent of companies export would suggest that there is tremendous potential there. But if the owners of the business haven’t got the ambition or confidence, it isn’t going to happen – however good the professional support services are.

Elaine Hurn: Advice generally is very fragmented because one port of call won’t do everything for you. The Chamber might be able to do some things but then you need a good accountant or you need a good lawyer or you need somebody who can deal with your freight forwarding. And then, when you want to deal with the funding of things, you need your bank on board.

Stephen Anderson: There is reluctance among small business people to do trade overseas. Increasingly they are going to receive international enquiries because there is a global marketplace and the internet makes it so much easier. The local chambers of commerce seem to be the starting point for a lot of businesses because that is where they are most comfortable.

Andrew Turner: UKTI is offering services and has a wealth of experience that can be tapped into. If companies don’t want to hear it, what more can you do to make people use your services? They can’t force us into becoming exporters.

Ian Parker: We have matched funding within the Passport programme and there’s support in market research, market visits and in exhibitions. But, then again, you’ve got to make sure that the company is right to take advantage of it, that it’s not wasting its time and money.

Who should the SME go to in the first instance for advice?

Ed Murphy: When I was exporting around the world, the range of help wasn’t anywhere near as developed as today and you had to fly by the seat of your pants and take a chance a lot more than you need to do nowadays. The help is there and people just need to think about it.

Andrew Turner: Do your homework first. If you are making plastic buckets to sell in the Preston area I would guess that you are not the right business to start selling to China or India. You have got to know your own product and the possibilities of that product. The one thing that helped us enormously in our two most successful markets was to appoint an agent – he has local knowledge, he knows the market, he knows our product, he can tell you about cultural difference and, believe me, Americans do have cultural differences.

How do you manage international partners?

John Wilkinson: There is no substitute for experience and feet on the ground, whether it’s using agents or whether it’s talking to your customers or talking to your competitors. It is about taking every step and applying as much diligence as you possibly can, whether it’s through professional organisations, visiting the country, using agents, talking to foreign embassies and talking to your bankers and so on and finding a good firm of local accountants over there that understand how things are done.

In today’s increasingly global market can Lancashire continue to compete and win?

Stephen Anderson: I think it can. The thing that influences things quite significantly from a financial point of view is the foreign exchange rates and we have seen some significant changes over the last 12 months in terms of the euro and the dollar. Recently, we have seen some weakening against the dollar which, hopefully, will give exporters the opportunity to take advantage and increase exports a little bit.

Ed Murphy: We can definitely build and expand international trade activities in Lancashire. There is a perception overseas that British goods are basically very well made. People want British goods so there is a demand, and we have a good presence overseas, people trust us that we will do what we say.

Tim Helliwell: It is about niche product areas, it’s about markets that are going to take those products. I think we have got everything going for us - we’ve got people who can assist with the company that drives forward.

Ian Parker: Do your homework, research the market, make sure your product fits, find the right support partners, find the right agent, distributor, joint venture operation whatever, just be professional about what you are doing and then you will win.

Andrew Turner: Yes, absolutely. Our workforce is made up of excellent hard working people who are more flexible than in most other countries.

Steve Estill: Lancashire has proved that it is adaptable and flexible and there is absolutely no doubt that Lancashire businesses can succeed in international trade. It is a case of go and get your advice, understand your market, know what you have to do, make sure you put everything in place to minimise your risk and get on with it ... and enjoy.

Elaine Hurn: A lot of businesses in the North West are about as lean and mean as they can get. I would like to see more of these good news stories where people are exporting, are winning their wars in international arenas.

Stephen Sadler: Companies are prepared to innovate, prepared to be flexible, to offer what their customers want and, yes, I think the future is looking pretty good for the area.

John Wilkinson: Yes, Lancashire can win. I think about the strong work ethic in this county, the strong legacy of entrepreneurship and you look at the mix of businesses that are here now.