Manufacturing contributes £6.7 trillion to the global economy, according to figures from Make UK, and in the UK this industry is thriving, currently the world’s ninth largest industrial nation – and on track to expand and reach the top 5 by 2021.
This important sector underpins much of the UK economy – Make UK’s figures also show that it gives jobs to millions, makes up 70% of business research and development, and accounts for 44% of all UK exports. That is why UK Export Finance (UKEF), the UK’s export credit agency, provided over £3.5 billion of support to exporters in the manufacturing industry over the last year.
UK manufacturers continue to impress, punching above their weight globally, and UKEF aims to ensure that no viable export fails due to lack of finance so that the industry can continue to reach its full potential. Academic research shows that companies selling overseas with access to trade finance have export volumes that are as much as 60% higher. For this reason, UKEF supports companies of all sizes. We do this in three main ways: helping exporters win contracts, fulfil contracts and get paid.
Pipe manufacturer Carpenter & Paterson is an example of a company that benefitted from UKEF’s support: thanks to UKEF providing India-based Reliance Industries with a £300 million guarantee on the condition that goods and work were sourced from the UK, Carpenter & Paterson secured over US$9 million in revenue over two years, helping to create dozens of jobs. It was the single largest project Carpenter & Paterson had ever taken on,and resulted in an increase of over 50% in revenue for the company.
Another of the companies UKEF has supported is Welsh manufacturer, Flamgard Calidair, who design and manufacture high-integrity fire safety equipment. The company was contracted to provide fire and shut off dampers for the Chernobyl New Safe Confinement site. This was a huge, international contract for Flamgard that would allow them to cement their position in the global marketplace. In order to fulfil their contract, Flamgard needed additional financial support for an advance payment bond they had to issue as part of their involvement with the project. Flamgard secured backing from Lloyds, while UKEF’s guarantee meant that there was no requirement for a deposit.
Another example of UKEF support in action is Northampton-based cleaning products manufacturer, Bioguard Hygiene. After winning an export order with a large pharmacy chain in the Middle East, the company sought out extra protection in case there were any difficulties with their increased production. As most of Bioguard’s business is domestic, the company only wanted a standalone insurance policy covering its new Middle East business – but struggled to find single-market cover from the private insurance market, so they worked with their local UKEF export finance manager who developed a bespoke export insurance policy to protect against the risk of non-payment by an overseas buyer. Without this, Bioguard Hygiene would not have been able to take on this order and take a big step into an important market.
In the manufacturing industry and beyond, opportunity can be limited within a local market due to competition from peer companies or market saturation – exporting offers businesses the chance to break through that barrier and capitalise on global market need. There is great global demand for UK exports thanks to its impressive track record as a strong trading nation. There is also potential for much more – and this is where UKEF can help. We work with more than 100 commercial lenders and brokers to offer government-backed loans, guarantees and insurance to support companies’ overseas sales. In the last five years alone, UKEF has provided £17bn worth of support for UK exports across a multitude of sectors.
Since being founded 100 years ago, UK Export Finance has led the way in delivering innovative finance to help British companies achieve international success across a wide range of industries across the world. Looking to the future, we will continue to get behind the manufacturing industry, providing financial backing and further support in exporting, ultimately aiming to bolster the sector’s position in the global market.