FDF stresses potential as manufacturers sideline exports

The survey encompassed all manufacturing sectors, including food manufacturing. More than half of respondents said they would be increasing investment spend over the next 12 months, yet only 30% said they would pump cash into entering new markets.

“In food and drink we know that there is a tremendous opportunity to grow through exports,”​ Steve Barnes, FDF director of economics and commercial services, told FoodManufacture.co.uk.

“Recent research completed by ourselves on medium-sized businesses was thought-provoking as 80% of the companies we spoke to export ‘reactively’, responding to international enquiries for their products.”​

This echoed the data from Barclays, which revealed exactly the same amount of surveyed general manufacturers exported reactively, in response to customer demand.

Worryingly, despite opportunities in the so-called BRIC (Brazil, Russian, India and China) countries having been highlighted for some time, almost a third of respondents to the Barclays survey weren’t active in those countries. Export markets most favoured were the US and Germany.

45% of those responding to the Barclays survey said less than a quarter of their sales came from exports, with only 35% foreseeing international trade would grow beyond a quarter of their sales by 2018.

Little appetite for new markets​

Only 3% had started exporting in the past two years, with most exporters having done so for at least 10 years, but having little appetite for new markets.

According to those surveyed, the four biggest barriers to export, in order, were:

• Cost;
• Competition
• Lack of government support/lack of knowledge

Barnes vowed the FDF would join forces with government bodies to address these concerns.

“Through our work with UKTI​ [UK Trade & Investment] we hope to bring to life the export opportunity for many more small to medium-sized food and drink businesses while at the same time working with DEFRA​ [the Department for Environment, Food and Rural Affairs] and others to break down the barriers to export.”​

When they were asked what kind of investments they would be making over the next year, the greatest focus was on machinery and machine tools, followed by new product development.

Upgrading factory fixtures​

Aside from that, almost half said they would be upgrading their factory fixtures and fittings, while 42% said they would invest in research and development. They slotted exports in after that.

Mike Rigby, head of manufacturing at Barclays, said: “Manufacturers appear to still have some reservations about investing in new faster growing markets to try to increase sales, instead they are still focused on the quick wins that cost cutting can bring to the bottom line.”​

More than two thirds of firms said they had been steadily increasing investment in the past five years. Almost the same proportion said they planned on doing so in the next five years.

The UK saw virtually flat annual growth in total 2012 food and drink sales, which clocked up £18.7bn exports according to FDF statistics.

Poor harvests, worsening economic conditions in the Eurozone, lower demand for UK commodities and slower growth to non-EU countries dragged sales down in the final financial quarter of 2012, the FDF claimed.

However, with value growth of 0.3%, food and drink was increasing ahead of total exports, which fell 4.5% compared to the previous year.