"I'm from the Government and I'm here to help"

The United Kingdom has a long and proud tradition of manufacturing, and the government recognizes the vital role this sector plays in the economy. Exporting is particularly important for UK manufacturing companies, given the relatively small size of the domestic market compared to global opportunities. In response, the UK government has developed various initiatives, policies, and support mechanisms aimed at helping manufacturers break into and succeed in international markets. However, while many of these programs have proven beneficial, there are areas that still warrant improvement.

This blog will explore how the UK government helps manufacturing companies export, with a focus on both the strengths and weaknesses of current initiatives. We will look at the role of key institutions such as UK Export Finance (UKEF) and the Department for Business and Trade (DBT), the effectiveness of trade agreements and trade missions, and the broader regulatory and policy frameworks that impact exporting. In doing so, we will evaluate the successes and shortcomings of the government’s approach.

1. UK Export Finance (UKEF) and Financial Support

Strengths

UK Export Finance (UKEF), the UK government’s export credit agency, is one of the most prominent tools for supporting manufacturing exports. Its primary function is to provide financial products such as export credit insurance, loan guarantees, and direct lending to help UK companies compete in global markets. UKEF can be particularly valuable for manufacturing companies, which often face large upfront costs when fulfilling international orders.

One of UKEF’s notable strengths is its flexibility in supporting companies of all sizes, from SMEs to large corporations. It offers insurance policies that protect exporters against the risk of non-payment by foreign buyers, which is critical for manufacturers who may have substantial capital tied up in machinery, raw materials, and logistics. Additionally, UKEF’s direct lending program enables overseas buyers to access financing to purchase UK-made products, creating a win-win situation for both the exporter and the buyer.

UKEF has also expanded its services in recent years to accommodate smaller businesses that might not have access to traditional forms of export financing. For example, the Export Working Capital Scheme helps UK manufacturers secure short-term working capital to fulfill export contracts, while the Bond Support Scheme allows banks to issue bonds (such as performance bonds or advance payment guarantees) to UK exporters at reduced financial risk.

Weaknesses

While UKEF plays a vital role, its reach and accessibility have been criticized, particularly for smaller manufacturers that may lack the internal resources or know-how to navigate its complex offerings. UKEF’s focus tends to be on high-value contracts or large transactions, often leaving smaller-scale manufacturers underserved. Some SMEs may struggle to qualify for UKEF’s financial products due to stringent eligibility criteria or the complicated application processes.

Another area of concern is the perceived lack of promotion or awareness about UKEF’s services among the broader manufacturing community. Many smaller manufacturers may not even be aware that export finance support is available, or they may find the process of engaging with UKEF too daunting. More efforts are needed to streamline access to UKEF’s services, particularly for first-time exporters and smaller manufacturers.

2. The Department for Business and Trade (DBT)

Strengths

The Department for Business and Trade (DBT), formerly known as the Department for International Trade (DIT), is another key player in supporting UK manufacturers to export. The DBT offers a wide range of services, including market research, trade missions, export workshops, and advice on international regulations. Through its regional offices, DBT helps UK businesses navigate the complexities of exporting, providing practical guidance and market intelligence.

One of DBT’s standout initiatives is the Export Academy, which provides small businesses, including manufacturers, with the knowledge and skills required to succeed internationally. This program offers a series of webinars, workshops, and 1:1 support tailored to the specific needs of manufacturing exporters, covering everything from customs processes to market entry strategies. Such educational programs are invaluable for first-time exporters, who may otherwise be overwhelmed by the intricacies of global trade.

DBT also facilitates trade missions and attendance at international trade fairs, allowing UK manufacturers to showcase their products, meet potential buyers, and establish business relationships in key markets. These trade missions help manufacturers gain a foothold in foreign markets, particularly in regions where building personal connections is critical to doing business.

Weaknesses

While DBT offers substantial resources, its ability to provide tailored, in-depth support to individual companies is often limited by its broad scope. Manufacturing companies frequently require sector-specific advice, but DBT’s services can sometimes be too generic, focusing on basic exporting knowledge rather than the nuanced needs of specific industries within manufacturing. A company specializing in aerospace, for example, will have very different requirements than a business producing consumer electronics.

Furthermore, DBT’s success in facilitating trade missions and helping companies break into new markets has been uneven. While large businesses with established export capabilities tend to benefit from these missions, smaller manufacturers may find them less accessible due to costs or the challenges of committing resources to international travel. The effectiveness of trade missions in terms of actual business results is also difficult to measure, and there is room for improvement in ensuring that the companies participating in these events receive sustained follow-up support to turn leads into contracts.

Lastly, post-Brexit trade complexities have added new layers of challenge for UK exporters, and while DBT provides guidance on navigating these, the scope of support in this area has often been insufficient. Many manufacturers have raised concerns about increased paperwork, customs delays, and regulatory compliance when exporting to the EU, and while DBT has launched initiatives to address these issues, manufacturers often report ongoing difficulties.

3. Trade Agreements and Market Access

Strengths

Post-Brexit, the UK government has prioritized negotiating free trade agreements (FTAs) with non-EU countries to expand market access for British businesses, including manufacturers. These agreements aim to reduce tariffs and trade barriers, making it easier for UK companies to compete in key global markets. For instance, the UK-Japan Comprehensive Economic Partnership Agreement (CEPA) is seen as a significant achievement that offers preferential terms for UK manufacturers, particularly those in high-tech sectors like automotive and electronics.

Moreover, the government’s broader strategy for international trade has sought to promote “Global Britain,” positioning the UK as an outward-facing trading nation. For manufacturers, this has included initiatives to enhance market access in rapidly growing economies such as India, China, and parts of Southeast Asia. Many of these countries offer significant opportunities for UK manufacturers to export high-quality goods, particularly in sectors like aerospace, pharmaceuticals, and advanced engineering.

Weaknesses

While the UK has secured trade agreements with several countries, the benefits of these agreements for manufacturers have been mixed. Many smaller manufacturers have struggled to see tangible gains from new trade agreements, as they often focus on high-level reductions in tariffs that primarily benefit large multinational corporations. For SMEs, the real challenges often lie in non-tariff barriers such as regulatory compliance, standards, and local competition, areas where government trade agreements provide limited relief.

Moreover, Brexit has created new barriers to trade with the EU, which remains the UK’s largest export market. The Trade and Cooperation Agreement (TCA) negotiated between the UK and the EU has not eliminated many of the trade frictions caused by Brexit. UK manufacturers have faced increased costs, delays, and regulatory hurdles when exporting to the EU, with many struggling to adjust to the new environment. The government’s efforts to mitigate these challenges have been criticized as reactive rather than proactive, with many manufacturers still waiting for long-term solutions to ease EU trade.

4. Regulatory Environment and Policy Frameworks

Strengths

The UK government has worked to create a regulatory environment that encourages exports, particularly through initiatives like the Export Strategy, which aims to increase the number of exporters and the value of UK exports. Policies aimed at supporting innovation and productivity in manufacturing, such as R&D tax credits and funding for advanced manufacturing, indirectly support exports by making UK products more competitive globally.

In addition, the UK Manufacturing Strategy emphasizes the importance of advanced technologies such as artificial intelligence, robotics, and green manufacturing, positioning UK manufacturers at the forefront of global innovation. By encouraging investment in these areas, the government hopes to create products that are highly sought after in international markets, giving UK manufacturers a competitive edge.

Weaknesses

Despite these positive initiatives, there are areas where the UK’s regulatory environment and policy frameworks fall short in supporting exporters. Manufacturers often cite the complexity and inconsistency of regulations across different export markets as a major hurdle. While the government provides some support in navigating these regulations, more coordinated efforts are needed to streamline processes and ensure that manufacturers can comply with export rules without excessive administrative burdens.

Additionally, the UK government’s approach to industrial strategy has been criticized for lacking consistency and long-term vision. Frequent changes in government priorities and policies can create uncertainty for manufacturers, making it difficult to plan and invest in long-term export strategies. The absence of a coherent, long-term industrial strategy post-Brexit has left some manufacturers feeling unsupported in their efforts to expand internationally.

Conclusion

The UK government has made significant strides in supporting manufacturing companies to export, with institutions like UKEF and DBT offering valuable financial and advisory services. Trade agreements and strategic market access initiatives have also opened new opportunities for exporters. However, there remain several areas in need of improvement. Smaller manufacturers, in particular, often face challenges in accessing the full range of government support, and the post-Brexit trading environment with the EU continues to present difficulties.

To better support UK manufacturers in the future, the government will need to focus on improving the accessibility and visibility of export support services, developing more tailored advice and assistance for specific sectors within manufacturing, and finding long-term solutions to the trade complexities created by Brexit. Only by addressing these issues can the UK truly harness its manufacturing potential on the global stage.