C2C Int trade conference combined 20.03.12

INTERNATIONAL TRADE CONFERENCE

20th March 2012

Welcome

Iain Shepherd

Coast to Capital Board Member

What is Coast to Capital

• One of a national network of Local Enterprise Partnerships• Partnerships between the private and public sectors, with

business in the leadership role• Purpose is to drive growth – private sector growth• Re-balance the economy – reduce dependence on public

sector jobs, reduce dependence on narrow group of financial and business services

• Aims are long term• Role is strategic, not delivery• Focus on where we can add value and make most difference

• Key facts about our area are in your pack

One 25 year goal

100,000 additional private sector jobs!

Two strategic priorities:

Internationalisation

Enterprise &Entrepreneurship

Why we focused on these priorities?

• They are specific and relevant to our circumstances

AND• They will have the greatest impact on

long term economic health and jobs growth

ANDThey are open to influence – we can

have an impact

Coast to Capital – 5-year Goals

• Creation of an additional 4,500 new businesses

and growing them

• Increasing the number of internationally trading

businesses by 4,000

• The creation of 20,000 additional private sector

jobs

Internationalisation

Three strands

1.International Trade

2.Foreign Direct Investment3.International Business Tourism

International trade

• What you may not know about our area……– Shoreham Company, Ricardo was once a “One-Man

Band”– Croydon was the first Airport with ATC– Brighton Born Sir Martin Ryle – Radio Telescope– Purley – Alexander Montgomery Low – Radio Guidance– Addiscombe – Frederick George Creed – Teleprinter &

SWATH

• We believe every business is capable of international trade

Our goals for international trade

1. Get those businesses who are currently actively trading overseas to expand into new markets

2. Encourage those who are occasional or accidental exporters to adopt trade as a core element of their business growth plans

3. Persuade current non-traders to explore international trade and take the first steps. Most will need input from external experts to help them overcome their real and perceived barriers to trade.

Our goals for international trade

We have the assets to achieve the goals:

• Gatwick Airport and excellent connections• Shoreham & Newhaven Ports• Great business base with strong sectors which have

propensity to export• Great providers of services• Great higher education and innovation infrastructure

But we need to understand the market

• Segment and target where impact will be highest• Where are existing traders - ACTIVES• Where are the most probable new traders -

PROSPECTS• Quantify – numbers, value

Research today will help illuminate

• But we already know the order of scale of what we are trying to achieve is well in excess of what has gone before

• Tackle a new and challenging part of the market

We and they, your potential new customers, need YOU!!

Segmenting the market

NOTS PROSPECTS ACTIVES

KCC/BSK/SOA

At the end of today’s session you should:

• Understand more about the market for your services in our area

• Appreciate the characteristics of potential new market segments

• Consider how we can build demand for the services you offer

Rob LewtasUKTI South East

The Government’s ambition for international tradePresented by Rob Lewtas

Rob Lewtas – C2C LEP Meeting 20th March

Topics to cover today

• The challenge & economic rationale for boosting exports

• The benefits of exporting

• Who are UKTI

• What we are doing to meet the challenge


The challenge & economic rationale for boosting exports

The Challenge...To double the UKTI client base from

25,000 to 50,000 clients by 2015


Why should companies export

Companies that export are 11% more likely to stay in business


Why Export ?


Economic Benefits

• Local benefits

– More sustainable businesses

– Local direct jobs

– Supply chain opportunities

• National benefits

– Improved balance of payments

– positive contribution to growth

– Improved competitive advantage Rob Lewtas – C2C LEP Meeting 20th March

UKTI Overview


UKTI Overview

• 2,400 staff

• 1,300 overseas

• 99 UK Embassies, High Commissions, Consulates and Trade Offices; and around

• 400 Advisers and support staff in nine English regions

• Responsible for Inward Investment & International Trade Support


ITA Locations


LONDON X2

8 ITAs within the C2C Patch

What are we doing to do to achieve our new goals

• Finance

– UK Export Finance changes

– Appointment of regional UK Export Finance Specialist Advisor

• Trade Missions –

– high level support

– Increased efforts on trade shows and industry sector events

• High Value Opportunities

– Tier #1 support

– Supply chain development through dialogue with Tier#1’s


What are we doing to do to achieve our new goals

• “GREAT” Campaign

• YELL.com

• White label brochure

• Increased outreach to partners

• Commercial diplomacy support

• International Trade Fora

• Companies House export guide to all new registrants

• Partner Relationship Manager


Our Challenge

To double our client base from 25,000 to 50,000 clients by

2015

What can we do differently or what can we do better to achieve

this?Rob Lewtas – C2C LEP Meeting 20th March

Less than 40% of SME’s know of UKTI

Thank you…


Karl Dalgleish

Shared Intelligence

Coast to Capital: Attitudes and Barriers to International Trade

International Trade Conference 20th March 2012

Part 1: Exporters

• Summary of our brief• Characteristics of exporters and barriers to exporting• Number of active exporters• Exporters by size band• Export propensity by sector and spatial context• Export markets and value• Growth prospects


Study Aims

• Analysis of trade data• Research into attitudes of SMEs to international

trade• Analysis of services required to move non-exporters

into exporters• Parallel activity:

– Trade Body Study (Si) and

– Exporter Business Survey (TBR)


ExporterCharacteristics


• Tend to be larger and older than non-exporting firms• Sectoral differences are important • Exporting propensity differs across the UK• International outlook amongst managers important• Innovative firms more likely to export• Most tend to internationalise reactively

ExporterCharacteristics


“Outward facing, new ideas and open to business”

“Knowledge based, high IP content, innovative, niche businesses”

Barriers to exporting


• Vary by export maturity– Non-exporters (Fear, cost, information/knowledge, culture, ambition)

– Exporters (Legal, contract and regulatory barriers)

• More barriers when entering high growth or non EEA markets

• Barriers don’t decline as firms become more experienced overseas they just change

• Innovative, growth aspirers and born globals often report more barriers

Numbers

• Different studies find different export propensities depending on sector and business size:– Using the findings of a BIS study on small business suggests exporters

account for 21.6% of companies in C2C (40,070 firms)– Current C2C survey suggest 10.5% (19,000 firms)– Recent further C2C survey result falls in the mid-point

• Which is right? Highly likely the range reflects the variance in the intensity of exporting behaviour

• Higher number likely to include larger proportion of less intensive exporters (Active but partial exporters)

Number of Actives

Nots Prospects

Actives

19,000 to 40,000 full and partially

active (11% - 22%)

Estimated C2C Exporters by sizeband

Sectors

Sectors

• The big sectors: production and finance and insurance

• …followed by business administration; transport and storage; accommodation and food services; and professional, scientific and technical

• C2C survey shows a number of manufacturing strengths and computer and related activities

Spatial Context

• Large proportion of trade in the Gatwick Diamond area reflecting range and number of global companies

• Don’t underestimate rural areas early figures are showing strong performance reflecting advanced manufacturing capabilities.

Markets


The total value of C2C Exports is estimated to be £13.6bn - 42% of the GVA of the C2C

economy

Markets


Could some exporters be encouraged to do more?


Export Activity as a % of Annual Turnover (Proportion of Firms)

Growth Performance


Growth Prospects


Observations

• There are 19,000 to 40,000 full and partially active companies involved in trade (11-22%)

• The key exporting sectors in C2C include manufacturing and business services

• Although larger firms tend to export there’s a large number of small and micros exporting too

• Like UK C2C firms rely on export wealth from EU and North America but appear to perform better in BRICs/CIVETs

• Economic contribution of exporters overall is substantial but scope to support growth amongst some exporters.

1 Naoroji St, London WC1X 0GB 020 7756 7600www.sharedintelligence.net [email protected]

QUESTIONS

Refreshments

Copyright © ICAEW 2011. All rights reserved.

businessadviceservice.com

BUSINESS WITH CONFIDENCE icaew.com

Charles Carter, Director, Regions ICAEW

Supporting growing Businesses


© ICAEW 2012

Where do SMEs get advice from?

• What do they think they want?

• What are the barriers?

– arrogance

– knowledge of sector

• Reality


© ICAEW 2012

What drives them to want support?

• Fear

• Growth - “M” out of SME

Support from qualified advisors or friends?



© ICAEW 2012

BAS highlights since Q4 2011

• 2,500 firms signed up

• Advertising campaign

• Reactions from stakeholders

• Potential partnerships


© ICAEW 2012

Advertising


© ICAEW 2012


© ICAEW 2012

Taking forward BAS…..

• BAS Advice week

• Marketing

• Partnerships

Karl Dalgleish

Shared Intelligence

Coast to Capital: Attitudes and Barriers to International Trade: Part 2

International Trade Conference 20th March 2012

Part 2: Prospects and Services

Prospects•Potential customers (Prospects)•What is holding them back •A bit about born globals and mid sized businesses

Services•Advice sought •Current provision•What we found in our research.

Prospects

• If you ask directly only 3% of non exporters say they are planning to start exporting (TBR)

• But if you ask if they are planning or want to grow their business the answer is 36% (BIS SME Barometer Feb 2011)

• In a recent C2C survey of young businesses - 23% (41,170 firms) plan to start trading

• 12% of women business owners consulted in a parallel enterprise survey (21,480 firms)

• 10-15% is our best estimate of non-traders who are PROSPECTS

Number of Prospects

NotsProspects

17,900 -26,850 (10%-15%)

Actives19,000 -

40,000 full and partially active

(11%-22%)

Prospects


Main reasons holding C2C companies back from exporting:• not knowing how to start exporting • a preference to concentrate on the UK market • lack of knowledge in how to sell to foreign markets• need to develop the (UK) business before starting to

export.

Comments on Barriers

“The biggest barrier is they just don’t realise the opportunity and its perceived to be a lot of hassle” “Knowledge – pure and simple – it’s the fear factor – international trade may be an easy way to expand but the barriers in terms of fear are still there and people need to be

educated about how you can operate abroad”

“SMEs face barriers to exporting in terms of language (when exporting to non-English speaking countries) and barriers in the form

of regulations and foreign taxation”.

“No resistance per se, but perceived risk is a big issue in current economic climate, many businesses are ‘hunkering down’. Easier potential markets are perceived to (all) be in turmoil, thus many

think the timing is not right, or would take so long to see results etc”Coast to Capital: Attitudes and Barriers to International Trade

Comments on Barriers (II)

““Exports can be a route to success or a route to disaster as exporting can be costly and risky for small firms.”

“Once they get more sophisticated its about managing risk- will I get paid? and is someone going to steal my IP?”

“Fearful of the unknown, the Euro, cost of exporting etc” “Air Passenger Duty – expensive compared to Europe –

local businesses facing enormous costs”


‘Born Global’ Firms

• Massive technological advances mean a new era of accelerated globalisation

• More entrepreneurs are considering internationalising

• Many experience ‘accelerated internationalisation’• 2.1% South East firms in this category: implies there

may be some 3,800 C2C ‘born globals’

Mid Sized Businesses

• Whilst there are many micros there are some UK 10,000 firms neither ‘large’ nor SMEs

• Only 0.2% of the UK’s business base but account for 20% of employment and turnover

• MSBs tend to export at a lower intensity than smaller firms but we know there are major MSBs in the C2C area already exporting

• Possibly 300 such coasting firms in C2C• This is a cohort that should be performing better

Services


What do businesses want from you?

What services are exporters interested in?


• Workshops with others with similar interests (e.g. markets, types of product) (31%)

• Detailed guides on specific export topics eg: identifying/engaging agents, specialist insurance, legal systems, delivered via web/print format (29%)

• Face to face guidance and support (26%)• Attendance on trade missions (19%)• Access to subsidised export guarantees/financing

(19%).

What distinguishes exporting owner managers?

• The key differentiating factor:– Managers who run trading businesses tend to have had

some kind of significant international experience – in work or other parts of their lives

– Those who run non-exporting firms tend not to have this experience

• Observation: can we give them the missing experience?

Where do Businesses go for Information/Advice?


Who is providing advice in C2C?


What did we find locally?


• Clarity around C2C assets. Events suggest perceived willingness to export but mixed capabilities

• Not so many provision gaps but scope for better integration and coherence

• Appetite for better co-ordination and clarity of offer• Signpost help for all but focus on prospects & partials• Awareness: excite and inspire - “demystify the export

process” - and stimulate market making activity.

Case studies: Trade Bodies


• We spoke to 29 trade bodies - nearly half (13) provide international trade services

• Tends to be a fundamental / important part of what they do

• Almost all have a base in C2C area or London and the South East

• Services: case studies, links, information, market intelligence

• Trade events, networking and lobbying role.• They are keen to collaborate

Case studies: Other Areas


• Focusing efforts on new exporters and a ‘coalition of the willing’ is a feature of comparator programmes

• Desire to stimulate the market to provide services: – In others areas sectoral bodies, intermediaries and

advisors are all seen as part of the solution – But early days as the landscape has changed so much

• Complementary provision, cross referral and getting wider stakeholders involved in export agenda.

Reminder – What have we learnt about our new customers?


• 19,000 -40,000 full and partial international traders (ACTIVES) and 17,000 to 25,000 PROSPECTS

• Exporters: – Their markets imply sophisticated offer

– They’ll pay and their prospects are improving

– Turnover could be increased for some

– Being born global a real possibility for many new firms

• NOTs: – Aspiration, lack of exposure/experience a big deterrent

– Information, networking and support would encourage them…

1 Naoroji St, London WC1X 0GB 020 7756 7600www.sharedintelligence.net [email protected]

QUESTIONS

© 2011 Grant Thornton UK LLP. All rights reserved.

Coast to Capital International Trade Conference20 March 2012

John O'Mahony, Tax Partner

C2C International Trade Conference.pptx


International expansion - a personal view

Introduction•International expansion ….why bother?•Key challenges


International expansion - key challenge I

Planning•There is no 'one size fits all' approach•Opportunistic vs. strategic growth


International expansion - key challenge II

People and management challenges•Recruit executives for international operations•Give international operations local autonomy•Send trusted domestic managers to international operation•Local recruitment •Culture


International expansion - key challenge III

Financing international expansion•Using own funds•Banks - domestic and international•Private Equity funding


Conclusions

• Be strategic and plan• Take advice and talk to business people who have

been there and done it!• Grant Thornton - Grow Global Report

Paul Hancox

Senior International Commercial Manager

HSBC

Simon Edwards

Airline Business Development Manager

Gatwick Airport

Competing to grow and become Competing to grow and become London’s airport of choice London’s airport of choice

Our shareholders

Global investors with GIP as controlling shareholder

42%

15.9% 12.7% 12.1% 17.3%

http://www.nps.or.kr/jsppage/english/main.jsp

Route Development – LGW Competing!

Forecasts constructed at a regional level as...

UK & CHANNEL ISLANDS

IRELAND

REST EU

EASTERN EUROPE

OTHER SHORT HAUL

NORTH AMERICA

CARIBBEAN & LATIN AMERICA

EAST ASIA

SOUTH ASIA

AFRICA

MIDDLE EAST & CENTRAL ASIA

AUSTRALIA PACIFIC

Allocation at Gatwick – S11 - Totals

SOURCE: LGW ACL95

...time of ideal slots differ by region

0400

0500

0600

0700

0800

0900

1000

1100

1200

1300

1400

1500

1600

1700

1800

1900

2000

2100

2200

2300

2400

Domestic

Short Haul

US East Coast

US West Coast

Caribbean

Africa

Middle East

Far East

South America

A

A

D

D1 D2

A

D

A

A

A1 A2

D

D

D

D1 D2 D3 D4A1 A2 A3 A4

D1 D2 D3A1 A2 A3

Estimated time of future slot demand by region

A1 D1 A2 D2 A3 D3

...different regional growth rates and LGW market share

27.0%31.3%

47.3%

17.4%

76.7%

0.9% 6.3% 11.4%

2.4% 2.4%

3.3%

2.4%

3.0%

4.4%4.2%

2.6%

Domestic Rest EU Other ShortHaul

North America CarLA East Asia South Asia MECA

LGW 2008 Market Share AAGR% 2008 to 2018

AAGR% to 2018 and 2008 LGW market share by region

Gatwick seasonalityPassengers by week

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

2010 2011

Week #

2 w

ay P

ax p

er W

eek

Source: GAL Traffic Results (29/08/10 – 28/08/11)

+103%

Ground Products

Summary of our Key Priorities

• More non EU and Long Haul traffic

• Continue to attract new long haul carriers

• Focus on un / underserved markets to offer traveller choice

• Increase in key business routes offered also grow frequency on existing routes

• Work to increase aircraft size

• Better use of current and future airport assets – year round operations

• Remember slot availability will diminish !!

Recent Success!!

Think Tank

ACTIVES

PROSPECTS

Partially Active

10,000+

Fully Active19,000 Markets

Younger firms

Born Globals3,800

Sectors

17,000 to

25,000Coasting

Mid-bandFirms300

Size

ASSETS

SERVICES

BARRIERS

Attitude for

growth

WHAT SHOULD BE DONE?

Inform Stimulate Collaborate Coordinate

To make sure SMEs are well informed about the benefits of trade ANDProviders of support services know who potential clients are and what they want

To get more current non-exporters to explore international tradeANDTo make sure support providers offer services which overcome initial barriers

To encourage cost effective network and collective approaches from SMEs and service providers

To make more effective use of the support that is available

Questions

1. How can we encourage more existing traders (the ACTIVES) to do more and move into new markets?

2. How can we encourage current non-traders (the PROSPECTS) to start trading for the first time and what are the barriers faced by businesses new to international trade?

3. What is the scope for collaboration between service providers across the private, public and third sectors and how can Coast to Capital help make this happen?

NEXT STEPS

Inform Stimulate Collaborate Coordinate

Thank you

Lunch and networking