"In our business, the customer is king," says Simon Cullingworth, managing director of industrial handling systems company Metreel. "If a customer needs us to do something, to adapt, to be flexible, then we'll do it."
It's this can-do attitude towards its future as well as its customers which underpins the company's success overseas. In today's challenging economic climate, UK businesses need to find new markets abroad in order to survive - and Metreel is a perfect example of how to do it. Turnover has grown from about £100,000-£200,000 in the early 1970s when it was formed, to £10m forecast for this year – and much of this is down to exporting.
"The benefits of exporting are huge, as there has been a decline in UK market opportunities," says Cullingworth. "Other countries have far more opportunities and, in some cases, there is actually less competition than in the UK. You just need to do your research, be consistent with your approach but understand that each market is different, and have the right support in place."
Founded some 40 years ago by engineering entrepreneur Mike Speakman and his partner Derek Jones, Metreel has grown from 10 people working in temporary offices in a car park to an international operation with more than 40 staff, exporting to all corners of the globe. Based in Ilkeston, Derbyshire, the company provides mechanical handling systems, safety systems, and cable and hose handling systems to a wide client base including oil and gas drilling contractors, car manufacturers, assembly plants, and the coal and nuclear industry.
New opportunities
"The real push to export came 20 years ago, when we realised that the UK market was declining," says Cullingworth. "We had been bringing products in from France or Germany and selling into the UK, but that started proving difficult.
"We realised that our own products gave us better opportunities. So we took our crane system into North America and set up a partnership with a North American company to supply parts. Unfortunately, five years into that deal they decided they were going to make the products that we made. We looked for another option, found another company, and the same thing happened again. So we then started our own company in North America – Metreel Inc. The business is still small but growing well. Our UK operation now exports to numerous countries including Russia, Australia, New Zealand, Brazil, Chile, Mexico, Ecuador, Canada, Saudi Arabia and the UAE."
But exporting can also be a risky business, and there's a lot to consider. "For example, when we got into the offshore oil and gas market about 10 years ago, we had to deal with a new range of standards, audits, inspections, and many different criteria in the contractual area," says Cullingworth. "We had to consider how to support our products – for example, something that's easily resolvable if it's in the UK might not be so easy to deal with if it's in Russian waters, in sub-zero temperatures.
"Then there are the financial issues. For example, around half our client base is in the oil and gas sector. Most of the oil and gas companies want bonds. If you have five jobs all wanting a 10% bond, that is potentially half a million pounds out of your facility. As an SME, that can be difficult. That's when you need financial support."
Fortunately, Metreel has been able to find such help for its overflowing order book through UK Export Finance's Bond Support Scheme, which provides partial guarantees to banks to back up UK exports. And by working with Peter Ponsford, one of Lloyds TSB's 21 international business managers, who has more than 30 years' banking experience. He and his colleague Mark Chandler, their Lloyds TSB's relationship director, have been there over the years to help Metreel develop its export opportunities to the full. While Chandler deals with the company's day-to-day requirements, Ponsford is called in to offer guidance on significant international trading issues.
"Metreel are storming ahead with their exports at the moment, so their requirements are rising rapidly as well," says Ponsford. "I think it's satisfying for them, but it's also great for UK Plc. Exporting is a must for our businesses at the moment. With the domestic market being difficult, companies like Metreel can look to emerging markets with real potential."
Metreel and Lloyds TSB have a long-standing relationship. "We've had a great deal of support and information from Lloyds TSB," Cullingworth says. "We've been able to draw on resources which helped us achieve our goals, along with help from the Chamber of Commerce, Business Link and UK Trade & Investment (UKTI)."
Every company that Ponsford works with has different requirements depending on its sector, and Metreel is no exception. "Every time Metreel wins a major contract they have requirements which need funding and that's when I get involved," he says. "They mainly work with the oil industry and they are experiencing a very, very strong order book at the moment. The work we are doing for them is mainly in the form of bonds and guarantees. For example, an advance-payment guarantee is when the buyer gives the supplier money to help fund the contract, but they want a bank to guarantee that money, in case the contract is not fulfilled.
Expertise on hand
Investigating export opportunities can be "a rather lonely place", says Ponsford. "You're suddenly expected to be an expert on all kinds of things. But having that expertise on the other end of the phone can make all the difference to your confidence," he says. "I often have a regular customer phone me up and ask how to approach something – will that be OK? All I need to do is say yes, that's fine, sounds good to me – and then they feel a lot more confident."
There are risks, says Ponsford, but often just talking about them with a client helps. "When people understand the transaction, they feel more comfortable and happy to move ahead. I've been in banking for many years and when a customer speaks to me, it's pretty unlikely for them to come up with an issue which is new to me," he adds. "While a customer is seeing something for the first time, we've seen it many times and we know it isn't a problem."
The next 10 years for Metreel are likely to be just as challenging as the first 40. It's an exciting time, says Cullingworth. "We've got two goals – to grow our North American market and see if that model would work in other areas. We're looking at South America or Asia. We're developing some new ideas for one product range to take advantage of different applications within the oil and gas industry. And we're looking to export to Korea and Malaysia next. We've found that British engineering has huge credibility worldwide. We're always pushing forward."
Navigating the market: a course to foreign trade
If you're thinking of taking your first steps into international trade, a Lloyds TSB international business manager will be there to guide you. They work closely with the UK government, other banks and trade organisations to help drive forward opportunities for UK exporters, and pride themselves on the one-to-one relationships they develop with customers.
Peter Ponsford is one of Lloyds TSB's 21 locally based international business specialists with expertise in international export. He regularly has face-to-face discussions with SMEs in order to cultivate a deep understanding of the business's needs and direct them to sources of help, such as UK Trade & Investment.
Like all of Lloyds TSB's international business specialists, Ponsford can give guidance on where to start researching the export opportunities, provide support on export finance and minimising the risks: "I help businesses with export prospects with any aspect of their international trade," he says. "For example, finance is somewhat different. Buying and selling goods takes longer, which in turn has an effect on cashflow. So we might talk about how to construct a financial package which will meet those requirements.
"Or if you're an importer, you're going to want to make sure that you get the goods that you're paying for, and if you're an exporter, you want to make sure that you are going to get paid.
"So that might lead to using a letter of credit, a source of comfort for both the seller and the buyer in that the transaction is being handled by bankers."
Seeking advice early is also key, he adds. "Sometimes a customer will come to me during advanced negotiations with their supplier or buyer, and the structure of the transaction will already be in place. So therefore it's difficult for us to impact greatly on the structure, and protect the customer.
"In addition, you will need to understand the laws and practices of international markets, so again the bank can help," adds Ponsford. "Then you can make the correct decision for your business."
You can discover a range of online guides to the risks and opportunities for your business of trading abroad, and more information on finding a local Lloyds TSB international specialist, at: http://businesshelp.lloydstsbbusiness.com/international/exporting/
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