Customs and Exports: Global Engineering

Modulift Spreader Beam

UK manufacturers should be monitoring export markets more closely now than ever before, says Sarah Spivey, managing director at Modulift.

Two meetings inspired this month’s (July) blog. The first was with an established distributor who was working through a number of enquiries and wanted to discuss the extent of our custom engineering capability. The other involved our marketing team; we were brainstorming for an awards entry we’re preparing that required us to look closely at our export markets and projections for the remainder of the year.

Both conversations prompted me to address fellow manufacturers, particularly those in the UK, who are hoping to harness the growth potential created by tailored solutions and global export.

Let’s look at each in more detail:

1. Custom engineering

Most manufacturers have a standard range of products but what really excites engineers are orders for custom solutions. It might be a higher, longer, wider, heavier, stronger, or faster version of the off-the-shelf product, or a requirement for something different altogether. In our case, our distributors and rental partners stock spreader beams up to 600t in capacity, but we regularly design and build spreaders up to 1,650t and beyond. We are also frequently called upon to tailor a solution to lift an unusual load or accommodate certain pick-points.

What was interesting about our recent meeting was that our distributor was keen to seize a slice of the relevant custom market but wanted to ensure we had the manufacturing capability to support them. As I said at the time, no matter how heavy or demanding a requirement for below-the-hook equipment is, there’s a good chance we’ll be able to provide a solution – and we might even have manufactured something similar before. If not, we relish a new challenge to go bigger, longer, higher, or deeper underwater. That’s why we work in manufacturing.

There’s a two-pronged lesson here for all manufacturers as these trends are likely to be replicated in numerous sectors. Manufacturers must be sure to, one, remind distribution and sales partners of the extent of their machining and engineering capacity; and, two, make certain that everyone is pursuing such opportunities. There is job satisfaction, margin, marketing opportunities, growth into new markets, and much more that can be gained by increasing provision of specialised products. Not everyone can, so it’s particularly important that those coveting market leadership up their game in this department.

2. Global export

Such initiatives are likely to involve opportunities overseas, which is really the crux of this blog. This isn’t a guide to export, but more a push towards considering opportunities where they may have been overlooked. I’m not going to patronise successful, exporting businesses and talk about the importance of cultivating contacts or respecting cultures, languages, regional standards, customs, etc as we know that already. But sometimes it’s important to take a step back, as we recently found out.

A number of market trends emerged that I wanted to share. It’s worth noting that export made up 80% of our sales in Q1 2018, versus 64% in our last financial year and 65% the year before that. As H2 2018 gathers pace, these numbers might fluctuate but I strongly suspect this will be our strongest export year to date, a notion supported by our global partners. The latest UK government-released stats confirmed by saying exports of UK goods and services rose to a record high of £620.2 billion in the year to March 2018.

How do your export numbers compare?
Could you be doing more to harness opportunity to expand overseas?
What would revenue look like at your firm if exports soared to 80% of sales?

They’re straightforward questions but it’s important that business owners ask themselves often, sometimes daily.

In the same government report, it was revealed that exports grew faster to Canada (up 12.7%), India (31.8%), and China (15.3%) than to the EU (10%). Again, there’s consistency here.What we detect as the percentage of business from the rest of the world, has greatly increased in recent times. Brexit is probably the most overused word in the blogosphere right now so I’ll keep the reference to a minimum, but the longer we remain in a state of uncertainty over future trade deals with Europe, the more I expect other markets to enhance in appeal to UK manufacturers. And there are other driving forces that’ll make that happen.

Take regions like the Middle East, India, and China, for example. I know my business isn’t alone in noting that there are a growing number of purchasing decision makers who favour the greater quality of product and service offered by a UK company versus a local or alternative supplier. Add in another important differentiator in renowned performance in a marketplace, and the export opportunities start to stack up. We could highlight America, Europe, the Middle East, and Australia as standout geographies last year. However, as we entered H2 2018, export markets in South Korea, Malaysia, Canada, Southern Europe, Qatar, Argentina, and even the Cayman Islands were of great interest.

Travel light

Certain products are better suited to export than others. There’s no point putting a large, heavy, low commodity item on a boat to Australia, for example. But in some cases manufacturers might not step back to realise the export potential of their equipment. Does one characteristic designed for ease of use actually double up as a quality that suits it to containerisation or shipping?

The modularity of our product, for example, makes it perfect for export; parts fit in standard containers for economic, efficient shipping and transportation, which keeps the carbon footprint as low as possible. Interestingly, the same feature appeals to marine influencers who are increasingly looking for modular solutions to upscale lifting activities on topsides, in particular to avoid limitations associated with fixed systems.

An inherent drawback of overseas trade is the miles product has to cover. However, it’s too often seen as a deterrent. The success of our business model has been in providing off-the-shelf solutions to markets all over the world. I’m sure companies that aren’t so keen on export could do the same. At the concept’s heart is a stock holding strategy with each distributor so they can monitor stock levels and place orders before they run out.

Keeping lead times down for end users is paramount to success, especially when a business is trying to make headway into new regions, so stock must be closely monitored. Of course, too much stock can be counterproductive so it’s never a case of sending partners as much equipment as they can store. It’s not rocket science; most companies now have got electronic systems in place so salespeople know what they can quote for. It’s easy to set trigger points so when stock levels reach, say, 50% the system triggers a purchase order.

Again, I’m not trying to state the obvious but hope to demonstrate how barriers to entry can be overcome with relative ease.

Pipe dream

Get your shipping process down to a fine art too. We work with fellow Dorset company, John Pipe International, a specialist in packing and freight, who guide us on paperwork, size, weight, packaging, and other considerations. Depending on the product, maybe a general use packing case for lighter goods lined with water-resistant bituminised paper will be required, or a more robust case with vertical bands to its sides and ends, giving greater stacking ability. Don’t write off the margin available in shipping goods worldwide. Entering new markets might even open doors to the aforementioned customisation opportunities.

We’ve never had a crystal ball and that isn’t going to change, but what we can continue to do is gather as much information as possible and apply strategies that have served us well to date. We are confident that export will be the major driver of continued gazelle growth of our company. We will continue to build our distributor network, whilst ensuring that existing partners further gain market share and get all the support they need from us to do so.

Does your business need to renew its passport?