If you work in an exporting role for a British firm, I’ll bet you’ve lost count of the people you have met who look at you incredulously when you tell them what you do. “Exporting?” They sneer. “I didn’t think we made anything to export anymore!”
Oh yes, very droll. If there’s one talent we Brits never lost it’s the ability to self-deprecate. You can try telling these jokers about our automotive sector, where exports are at an all-time record, our burgeoning aviation and pharmaceutical sectors till the cows come home. I’ve tried it, but to a lot of people their mind is made up. Britain is finished as an exporter of goods.
Courtesy of http://www.freedigitalphotos.net
Well, I’m sorry if I’m the bearer of bad news, but the way things are looking at the moment, I fear that the jokers may be about to have the last laugh. Not that there will be much for any of us to laugh about if we don’t do something soon.
When the international trade figures for the final quarter of last year were released, one economist was prompted to comment, “We’re still terrible at exporting.”
I was in London last night for the annual awards ceremony of the Institute of Export, and it was good to see so many young (and some not so young) people striving to acquire the skills that our country so badly needs if we are to thrive in the future. I did a quick straw-poll, asking a few people what they thought about the claim that Britain is terrible at exporting. There didn’t seem to be any sympathy for this point of view.
And by any yardstick, they’re right. In 2011, the UK was the world’s 10th largest exporting country of goods. Not bad. When you consider that the UK has only the 22nd highest population of all countries, we’re punching above our weight. On the other hand, we’re the 8th largest economy in the world, so perhaps not.
And there’s more good news: From 2006 to 2011, UK exports increased by a little under 12%. That may not sound like much, but of course that period covers the global economic crisis that hit world trade hard. Considering that the British economy as a whole showed hardly any growth at all over that period, 12% is a source of some considerable comfort.
OK, So Here’s the Bad News:
Between 2006 and 2011, the UK slipped from number six to number ten in the league table of exporters of goods.
“Ah!” I hear you say, “But that’s because of the BRICS. It stands to reason that the big, emerging economies are going to outperform us in time.”
Well, up to a point, Lord Copper. Of the four countries that have left us behind, one (Russia) is indeed a ‘BRIC’ economy. Another is Korea, also a country that has been industrialising rapidly. But it’s the final two that caused me to ponder. They are The Netherlands and Italy. That’s The Netherlands (population 17 million) and Italy (population about the same as the UK, but in absolute economic turmoil if the press are to be believed.)
And I have to give a special mention for the country that finished 11th. That would be little Belgium, with a population barely one sixth that of the UK, yet virtually achieving a dead heat with the UK in 2011. We only stayed in the top 10 on the equivalent of goal difference. In fact, The UK had the slowest growing exports among the world’s top ten exporting countries over this period.
So why aren’t we doing better? Over that six year period, the United States achieved 42% growth, putting the country in good stead for achieving President Obama’s aim of doubling their exports. The Netherlands achieved 40%, Germany 32%, Italy 25% and France 20%. We have to ask ourselves why our export growth was not higher.
One thing seems clear to me. It isn’t because of the Eurozone, no matter what our political leaders keep telling us. If four leading Eurozone economies are beating us in export performance, (both in absolute terms and in terms of growth rate), what are we doing wrong?
And before anyone asks, it’s not because of any collapse in our financial services sector, either. I’m talking about exports of goods here. You know, the real stuff that you can actually put on a ship.
Some time ago, I berated our government for cutting the funding to UK Trade and Investment, the agency that promotes British exports and inward investment. It was good to see those cuts reversed late last year. We can always rely on this government to do the right thing, once they have exhausted all other possibilities.
But I confess, I really am stuck for an explanation for why British exports are not doing better. Is it a lack of government support? Shortage of finance? Have we lost the essential skills to really notch our manufacturing capacity up a gear or two? Or are exporters just not trying hard enough?
Something, somewhere is wrong. I’d love to know, dear reader, what you think we need to do.
Happy accidents!
Footnote: I’m indebted to a very knowledgeable exporter I met in London last night, who told me that 67% of all exporting companies became exporters by accident. I suspected it all along of course, but nice to know I’m in the majority!
The Accidental Exporter 
I guess it depends on how you define exports! If we are talking about British manufacturing exports, they are presumably supposed directly related to British manufacturing. During our life time, British manufacturing has shown significant decline, and the following figures show that manufacturing now only comprises 10% of our GDP: “The United Kingdom is the world’s seventh largest economy. Like in the case of many other developed nations, services is the biggest sector of the economy and accounts for more than 75 percent of total GDP. The key segments within Services are Distribution, Transport, Hotels and Restaurants (18 percent of total GDP), Government, Health and Education (20 percent); Professional and Support (11 percent); Financial and Insurance (9 percent) and Real Estate (9 percent). Although the United Kingdom is still one of the biggest manufacturers in the world, production constitutes only 10 percent of the GDP. Last big component of the GDP is Construction, which accounts for around 7 percent of total output.” (SOURCE: http://www.tradingeconomics.com/united-kingdom/gdp-growth)
That is not to say there are not some significant UK manufacturing success stories, but these tend to come from the more established manufacturers. JCB today announced the landmark completion of their one millionth machine, and the UK luxury car market is experiencing sustained export orders from some of the world’s ‘new economies’. It is really encouraging to see that some British manufacturers continue to beat the drum of quality engineering, because that can only filter down to our thousands of excellent SMEs. However, the main reason why we have failed to uphold a reputation as one of the world’s important exporting nations, is that while we are fantastic creators, innovators and inventors, for the most part we are just not very good at selling! You can have the best products in the world but if you don’t tell people about them, and use all of the marketing techniques that modern technology provides to do so, then most products will not sell themselves.
The Queen’s Award for Exports in April saw more than 100 companies of all different sizes recognised for their exporting successes, from different business sectors, and targeting multiple different world markets, So there are plenty of success stories out there, but being British we don’t shout loud enough about them. So let’s start shouting!
you could say that UK is bad at exporting, but you are very good at importing. UK imported(in 2011 figures) from the netherlands 39b worth of goods and exported just 27bn. That’s the case with all major trading partners. UK has a big deficit regarding trading balance and I don’t think that the problem of exporting is the main issue…but the importing. If you’re saying that 67% of companies became exporters by accident that means UK has a flexible framework for those companies to facilitate and promote exports.
So, I don’t think UK is terrible at exporting but I think UK is terrible at importing.
Hi John and Serban!
Thanks very much for your interesting comments.
I’m not sure John, but I THINK I’m talking mainly about maunufactured goods. The figures don’t include services, but they do include primary commodities such as oil. I’m not entirely sure how much they make up, I’ll try and find out. I agree with your main point about celebrating successes. I personally haven’t seen too much coverage in the press about the Queen’s Awards, which is a pity. I also think you’re right, it tends to be the ‘selling’ bit that we are weak on in the UK. Selling is not really seen as a noble profession, rather it’s something that spivs do, or people who are between ‘proper’ jobs. I had a great chat with a woman from Anglia Ruskin University about their new online degree in sales management. Sounded right to me, maybe a step in the right direction.
Serban you are absolutely right, we are very good at importing. Or very bad, depending on how you look at it. I’d like to see our exports and imports in balance, but only by increasing our exports. Imports are not necessarily a bad thing if they help us to be more competitive. See my earlier article about the theory of comparative advantage. International trade benefits everyone! https://accidentalexporter.wordpress.com/2011/05/15/dismally-abysmal/
One of the issues that often slews trade statistics is the export of goods to a central European destination that then re-exports throughout Europe. An example is (or certainly used to be) the export of steel to the Ports of Rotterdam and Antwerp for onward transmission. These would appear as exports to a single country and then they would, in turn, claim the onward export to all corners of Europe and beyond. This may explain the high ranking of both Holland and Belgium – but don’t quote me on it. Similarly, the refining of crude oil from the USA carried out in British Ports counts as an export to USA when it is returned and has, certainly in the past, had a big impact of export stats dependent on oil prices and stocks. In summary, sometimes headline stats are not quite what they seem.
Hi Supersaint, thanks very much for your insight on the stats. I’m aware of this, which is why I chose only to look at long term trends. The fact is that exports for all other leading countries have been growing more quickly than ours. I think it’s hard to deny that we seem to be missing a trick here,and I’d like to know why, and how we can do better. It’s good to have a debate about this.
From my point of view my explanation on why you Brits are not doing well enough exporting is simple: need. Or rather the lack of it.
Spain, doing as badly economically as we´re doing, have increased its exports to record levels and managed to maintain our part in world trade over the last years¿The main reason for it? Spanish companies either export or die. I agree that in the long term it is not the best of reasons, but the thing is that just today it has been announced that in March we exported more than we imported for the first time in history…
Hi Carlos
I was very interested to read your comments as I happen to be in Spain at the moment. Yes, your point is a good one, I think. It also fits with some of the things I have been seeing for myself in Spain. Need is often a powerful driver for business.
Then again, I wonder how the USA has achieved such strong growth in exports while having low unemployment and a growing domestic economy?
Thanks for your comments. It’s quite an achievement for Spain to be exporting more than it imports, and it’s something to consider for those who tell us the Eurozone economies are in decline!
When UK manufacturers and exporters provide the same or more resources to their export business as their domestic business, to include financial, human and strategic resources, then the UK may start increasing the export volumes. Many UK based SME’s see exports as “low hanging apples” with no official export / international market development plan and no budget to support on. The culture internally of “its only export” has to stop. I work with UK exporting manufacturers and suppliers all the time and I am continuous surprised (being a Brit based in Scandinavia with a deep background of International trade) at the poor support and lack of experience given to support the local (export) markets. There are exceptions to this of course. We (the UK) needs to get serious about exporting at every level. Then success will follow.