Written submission by Society of Maritime Industries [SFE0002]

 

Society of Maritime Industries submission to “Inquiry launched into Department for International Trade’s support for exports”

The Society of Maritime Industries (SMI) welcomes the opportunity to comment on the inquiry, particularly as an accredited Trade Challenge Partner (TCP).

About the Society of Maritime Industries (SMI)

 

a)      SMI is the voice of the UK’s maritime engineering and business sector promoting and supporting companies which design, build, refit and modernise ships, and supply equipment and services for all types of commercial and naval ships, ports and terminals infrastructure, offshore oil and gas, maritime security and safety, marine science and technology, maritime autonomous systems and marine renewable energy.

b)      SMI members are part of an industry which directly employs 187,500 people, and generates £14.5bn Gross Value Added (GVA) to the economy. 

c)       SMI is a not-for-profit company limited by guarantee with membership open to any UK based company or organisation which works in those business areas mentioned above.  Member companies range in size from SMEs to major companies with international operations.

d)      SMI’s predecessor named organisation came into being in 1966 for the primary purpose of assisting companies with their export potential.  We have therefore been an important partner with the various iterations of government departments responsible for the UK’s export programmes since that time.

 

Our responses to the questions you pose are as follows:

 

Are the Department for International Trade’s export services fit for purpose and sufficiently resourced?

  1. They are not resourced for effective Trade Promotion.
  2. The Tradeshow Access Program (TAP) of grants gets increasingly difficult to work with for companies.  Approximately 2,400 UK companies are no longer able to benefit from the scheme as they have had 6 grants since April 2009.  Many companies work in multiple sectors which can mean several trade shows per annum and therefore they could use all the grants in one year.
  3. It can take 5-10 years for companies to successfully and sustainably export to a country but current DIT targets are focussed on very short term goals i.e. business won at a show is the only target for TAP.  Exhibitions are only one part of the sales options (visits, missions, online, phone calls) so tying down business to one event is a false objective.
  4. If we do look purely at the “Business Win” targets that DIT require, in the current financial year 2018-2019 SMI has issued, in its role as a TCP, 13 TAP grants with average expected business wins from the recipient companies of £312,000 per grant.  A grant of £2,500 that supports £312,000 of business wins appears to be exceptional value for HM Treasury and therefore it would appear an obvious choice to roll out more grants to more companies.
  5. The UK’s competition at trade shows is substantially supported by their national export programs.  This support means that more of the UK’s competition is at overseas events, meeting more contacts, creating more opportunities and winning more business.
  6. Commercial Officers in post need to be specialists and know their market sectors.  When this is the case they become very powerful business tools for UK companies.  Too often we hear of Commercial Officers being made redundant or given further sectors to cover which only dilutes their knowledge and usefulness to UK companies.
  7. Time will tell if DIT is resourced for trade policy negotiations.  Liam Fox on the Andrew Marr show January 20th 2019 indicated that “up to 40 agreements would be signed before March 29th 2019 but with none currently completed.”

 

How effectively does UK Export Finance support companies seeking to export?

  1. Marine companies do take advantage of the UKEF offer.  Drawbacks include response times in a commercial environment and other national agencies being more aggressive with terms and interest rates.

 

Is the Government effectively identifying and resolving market access barriers faced by UK exporters?

  1. Too early to say as the DIT Trade policy team has yet to agree anything.

 

Are the objectives outlined the Government’s new export strategy, and the ways proposed for achieving them, the right ones? Is the strategy sufficiently tailored to markets with particular potential in the post-Brexit trading environment, and to resolving challenges exporters could face due to the UK’s new relationship with the EU?

  1. The document sets out ambitions.  It has no detail on how any of the ambitions will be achieved.  A much needed follow up detailing the specifics is required.

 

How effectively is the Government working with devolved administrations and local governments to support UK exports?

  1. We work to ensure that there are no Scottish/Welsh/NI pavilions when we are at an exhibition with a UK Pavilion.  Understanding what is available in each jurisdiction is complicated and further complexities are added by DIT’s regional operations all having different offers for companies.

 

How effectively is the Department promoting UK exports overseas, for example through the GREAT campaign?

  1. GREAT campaign marketing materials are notionally available for Trade Challenge Partners (TCPs) to use at trade shows.  No funding is made available for the creation of the space to put up stands, and no funding is available for its production.
  2. Generally the GREAT campaign is appreciated and welcomed by SMI but using it at a trade show comes down to budget.  Promoting “UK PLC” will not be covered by UK companies at trade shows.  They have paid for their space, standbuild, travel/hotels etc and do not have budget for “UK PLC”.  Just as an example, the production and hanging of a 2m x 2m overhead banner at a Shanghai exhibition will be approx US$3,500.  That cost would need to be shared amongst our typical group size of 5-10 exhibitors.
  3. Promoting “UK PLC” is a prime example of Government doing what only Government can do.  SMI works with more non-members than members at overseas exhibitions.  In a typical year of overseas shows SMI has a split of two thirds non-members to one third members.

 

Is the UK’s “Exporting is GREAT” programme effectively raising awareness of export opportunities for UK companies? Will it need adapting in a post-Brexit environment, and if so, how?

  1. TAP Scheme – companies do not understand why this has become more restrictive when government ministers talk about a “Global Britain”.  There should be un-restricted access to TAP and generous support for the creation of UK Pavilions at key trade shows.  The UK’s companies should be incentivised to get out into new markets, not restricted by risk averse civil servants.
  2. Lateness – All DIT budgets and plans are late.  Business planning for a financial year typically finishes in the September of that year, at least 5 months into the financial year.  The 2019-20 TAP program is late out again with poorly managed processes and Terms and Conditions.  The TAP program is for a single year and should be for a 5 year program.  SMI is planning a presence for a South Korean exhibition in October 2019 and we have no sight of whether it will be supported by TAP or have any other DIT support.  The typical situation is for funding (if there is any) to be clarified only a few weeks before an event.
  3. The online “Alert” system – we have not heard of any business wins coming from this in our sector.  SMI forward “alerts” to appropriate companies but if they register they don’t appear to hear anything back from the post.  Recent expanded online alert services seemed to have backfired and created lots of false alerts e.g. requests for suppliers of “marine plywood” created lots of alerts in the Marine sector.

 

How should the performance of the Department and UK Export Finance (UKEF) be measured in terms of how effectively they support exporters?

  1. Speed – commercial deals require fast turnaround and decisions
    Value – the value of a deal (UK content) to the UK must be known if UKEF have supported it

 

Are there export promotion services in other countries that the UK could learn from?

  1. Quite simply our competitor nations are able to be at more trade shows for less money than UK companies.  If you are at more trade shows you will collect more contacts, build more relationships, learn about more projects and win more business.  Examples of other nations:
  2. “Made in Germany” - This system supports German companies to approx 50% of the cost of exhibiting including flights/hotels/standbuild/space.  Circa €60bn is spent by Germany on this scheme.  Germany is the number one European exporter and it remains a mystery why DIT don’t just copy the system as evidently it works.
  3. Image 1 below demonstrates the difference in support the German companies are able to draw upon.  Please note just the lighting rig.  This will have cost €5-10,000 to hire or buy, plus rigging fees, plus extra electrical power fees.  Contrast the “Innovation is GREAT” signage costing SMI £500 to the scale of the “Made in Germany” banner.
  4. SMI would like to pose the question to you – which approach enhances the brand images of its exhibitors and supports the message of “quality and innovation” plus making the companies look more attractive to visit?

Image 1

 

 

Singapore – 50-70% support for exhibitors inc flights/hotels/space/standbuild https://www.enterprisesg.gov.sg/financial-assistance/grants/for-partners/international-marketing-activities-programme

Spain – 80% support for exhibitors inc flights/hotels/space/standbuild

Chinese & South Korean – expected that these are heavily state funded

USA – 50% costs covered

  1. The DIT Secretary of State stated in a letter to the SMI in June 2017 that it was our “commercial decision” if we wanted to enhance a UK pavilion at an exhibition.  This would mean charging the UK companies more to be in the pavilion.  Higher prices reduce the ability of companies to exhibit.  Less companies means less people meeting potential new partners and learning about new projects and finally therefore less exports.
  2. As a Trade Challenge Partner administering the TAP grants we are asked to adhere to the GREAT brand guidelines when creating pavilions.  No funding is given for this.

 

Are there particular exports that the Government should not seek to promote?

  1. N/A

 

 

 

February 2019