Tracking the Export Journey by West Cheshire and North Wales Chamber of Commerce

February/2014

Tracking the Export journey

In partnership with

Job No: 17100

Proof Event: 11

Customer: EEF

Project Title: Export Insights

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA T: 0207 055 6500 F: 020 7055 6600

Contents

Introduction 1 A focus on growing exports

Which markets and how many?

Making contacts, securing customers 11 Keeping up with change

Viewpoint from Barclays

Key takeaways

Job No: 17100

Proof Event: 11

Customer: EEF

Project Title: Export Insights

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA

Job N

T: 0207 055 6500 F: 020 7055 6600

Custo

Tracking the Export Journey February 2014 1

Introduction In 2012, the UK exported more than £490 billion worth of goods and services. This represents an increase of nearly 30% over the past five years. Around one in six UK-based companies sells to customers overseas, and in the World Trade Organisation league table the UK ranks 11th for goods exports and 2nd for services exports. Within the manufacturing sector, companies are more likely to export than those in the rest of the economy: while industry accounts for around 11% of UK output, it delivers a disproportionate 50% of exports. Even though these are large numbers, there is a consensus that the UK’s trade with the rest of the world needs to increase further if we are to build a stronger and better balanced economy. The government has gone so far as to set an ambitious target of doubling exports to £1 trillion and seeing an additional 100,000 companies exporting by 2020. To achieve this, the value of UK exports will need to expand by around 10% per annum over the next seven years. If the global economic recovery remains free of significant disruptions in the coming years there will be many opportunities for the UK to reach this target; but inevitably there will be barriers and challenges too. Our research places the spotlight on the role that manufacturing can play in the UK’s export ambitions and primarily looks at the journey many companies embark upon to grow their presence in overseas markets. We conducted in-depth interviews with more than 20 manufacturing exporters to better understand their export journey – starting with the decision to enter a new market, through to identifying potential customers and maintaining good relations and market knowledge to allow for a sustainable order flow. We found a number of similarities in the approach companies use to secure new export sales. First and foremost is the recognition that selling to new customers in new markets is an important route to growth for companies. Secondly, there is no need to embark on this journey alone: there is a wealth of information and support both in the UK and across individual countries that helps to generate results more quickly. Finally, securing a pipeline of orders in unfamiliar markets requires a very large commitment from management in order to understand the market opportunities and meet potential contacts and customers on the ground.

6LA

Job No: 17100

Proof Event: 11

600

Customer: EEF

Project Title: Export Insights

The differences in approach between exporters are perhaps more stark. Beyond our traditional markets in Europe and the growing behemoths of China and India, there is not a simple formula concerning which markets to enter and how many. UK manufacturers approach their export decisions differently: once a market is selected, companies are divided on which is the most effective export model – direct from the UK or through an agent or distributor. What is more, regulations and entry procedures vary depending on the product and the market. While our research shows that succeeding overseas demands confidence, connections and commitment, those on the export journey are ultimately rewarded with new orders and a more diverse and resilient customer base. Our case studies show that there is no set model for becoming an exporter, but the manufacturing sector is home to many of the companies that will make the £1 trillion export target a reality.

How we compiled this report The companies we interviewed for this report are all experienced exporters that have expanded their presence in overseas markets in the past three years, either by selling to new customers in existing markets or through entry into a completely new geographical market. EEF interviewed 21 manufacturing exporters about their experience of expanding their export sales. This included the process of identifying new market opportunities, the sources of information and support used, the amount of time spent in country understanding the market, making contact with customers, and the challenges and barriers to securing new orders. Companies interviewed spanned SME and large companies and covered a broad spectrum of manufacturing sub-sectors including motor vehicles, electronics, metal products, consumer goods and precision engineered components. Across our sample, exports currently account for almost three-quarters of total sales, which is approximately equal to £180 million per year.

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA T: 0207 055 6500 F: 020 7055 6600

Tracking the Export Journey February 2014 2

Plastics Capital Plastics Capital is a plastics products manufacturer focused on proprietary products for niche markets. The company has four operating subsidiaries, which between them produce plastic ball bearings, industrial films, specialised plastic rods (mandrels) used predominantly by the manufacturers of hydraulic and other industrial hoses, and creasing matrix, a consumable product which is an integral part of the manufacture of cardboard boxes. Plastics Capital was incorporated in 2002 and has grown mainly through acquiring businesses focused on manufacturing specialist plastics products. It has an annual turnover of approximately £35 million. Exporting forms an important part of the company’s business strategy, with two-thirds of output destined for overseas markets. The company exports to more than 80 countries around the world and sees a significant opportunity for growth in developing and emerging markets. The global market for their products is comparatively small, and the company feels quite protected in its current niche. Plastics Capital exports through direct sales and through a large network of distributors for the creasing matrix business, which has been developed over a long period of time. As such, there is a need for a very collaborative approach when working with distributors to help identify new sales opportunities and also to identify potential, new end customers. Nick Ball, Finance Director at Plastics Capital, explained that selling into emerging markets can be challenging, but the company has strategies in place

Job No: 17100

Proof Event: 11

Customer: EEF

Project Title: Export Insights

and takes actions to mitigate risks. The company has a number of in-country sales offices staffed by local employees and has recently set up local sales offices in India and China, where language and business customs can be challenging for an exporter. These new sales offices help to manage the country-specific distributor networks, deal directly with end customers and identify new opportunities. Information and advice is important when exporting to a new market and for helping to understand business practices and customs. In the first instance, information is gathered through networking with other companies through business groups in the UK, engaging with professional services and advisors with experience in markets, and making use of business organisations in the country in question, such as the China-Britain Business Council and UK India Business Council. Company representatives also regularly attend trade shows that are specific to its products or end customers, in order to develop and maintain networks and gain new export sales. Although there are plenty of global growth opportunities, Plastics Capital believes that Africa has great untapped potential for export sales for some of its products, and considers the continent to be on the company's medium-term horizon. Entering African markets will require a great deal of research and information ahead of starting the export process, and whilst Plastics Capital has not used UKTI services in the past when entering new markets, it may look to do so in future to complement its current procedure.

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA

Job N

T: 0207 055 6500 F: 020 7055 6600

Custo

Tracking the Export Journey February 2014 3

A focus on growing exports Key points on the export journey A FOCUS ON GROWING EXPORTS

WHICH MARKETS, HOW MANY?

MAKING CONTACTS, SECURING CUSTOMERS

KEEPING UP WITH CHANGE

•• The economic environment is driving greater focus on selling to new markets. Domestic market growth is limited, and uncertainty about the outlook in traditional developed markets persists. •• Some manufacturers looking for future growth are becoming more strategic in their pursuit of new customers, by proactively targeting markets rather than reacting to potential opportunities. •• Manufacturers are building greater resilience by expanding the number and range of markets that they sell to. The act of selling UK-made goods overseas is a vital business activity and will become increasingly important in the future. Exporting is widespread, and is neither restricted to a few companies nor reserved for an ‘elite’, specialised group. Over one-third of manufacturers export every year, and nearly a quarter of all manufacturing output is directly exported. A further 39% of output feeds back into industry as intermediate or investment goods, some of which will be destined for export markets at a later date. The economic environment in recent years has been highly uncertain, and companies have responded by diversifying their strategies and spreading their risks across different markets. Looking ahead to the medium- and long-term outlook, traditional markets such as the European Union are likely to remain uncertain for some time as the process of private and public sector deleveraging and adjustment continues.

6LA

Job No: 17100

Proof Event: 11

600

Customer: EEF

Project Title: Export Insights

The domestic market, while showing signs of strength, is also unlikely to have the power to sustain all of the growth the UK economy needs to regain the ground lost during the recession. In the context of this environment, companies are being driven to expand their export horizons and take advantage of the growing potential in markets beyond those with which UK businesses have traditionally traded.

Companies export because it is good for businesses Not content to just stand still, manufacturers have plans in place to grow and develop their businesses through a range of strategic actions, including breaking into new sectors or markets, and developing new products, services and processes. These activities have significant pay-offs – by growing the size of their potential market, firms increase their opportunities for profit.

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA T: 0207 055 6500 F: 020 7055 6600

Tracking the Export Journey February 2014 4

Chart 1

Manufacturing trends Value of manufactured exports, £bn £bn 220

•• Exports of manufactured goods are on track for a fourth consecutive year of growth in 2013.

200

180

•• Export growth rebounded strongly post recession, posting its second strongest rate of expansion since the late 1990s in 2010.

160 140 120

03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12

100

Source: UKtradeinfo

This is, however, only part of the story. Studies have shown that companies that export tend to grow faster, are more strategic, have higher turnover and employ more people than their non-exporting counterparts. According to the Small Business Survey 20121: •• Three in ten exporters had increased employee numbers in the past 12 months compared to just one in seven non-exporters. •• The mean turnover for exporters was significantly higher than the average. •• Half of exporters expect turnover to increase in the next 12 months compared with just 37% of non-exporters. •• More than four in five exporters are aiming to grow their business over the next two to three years compared with 65% of non-exporters.

Companies enter new markets for a range of reasons During the recession, some companies faced dwindling demand and, as such, were forced to rethink their strategic plans and expand their horizons in order to survive. Other companies have identified significant opportunities both during and post recession, leading them to target new markets strategically. In a recent survey, just over half of manufacturers indicated that they were planning to enter a new export market and one-fifth said they planned to start exporting products in the year ahead2. Some of the factors that drive companies to be strategic exporters include the following: •• Developing products to enter new markets can be a strategic move by a company seeking to start or expand their export portfolio. Customisation or identifying a gap in the market can be an effective strategy for entering new markets, and many manufacturers are actively innovating to do just that.

https://www.gov.uk/government/publications/small-business-survey-2012-sme-employers EEF/GfK NOP Investment Survey, 2012

1 2

Job No: 17100

Proof Event: 11

Customer: EEF

Project Title: Export Insights

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA

Job N

T: 0207 055 6500 F: 020 7055 6600

Custo

Tracking the Export Journey February 2014 5

•• Applying knowledge and processes to other sectors and markets is another way in which manufacturers are expanding their export offerings and entering new markets. Often, knowledge and processes that a company develops for one product can have applications for a wider range of sectors and markets. This can be an explicit strategy to help firms enter new markets, or it can be an almost accidental but fortunate discovery that companies choose to capitalise on. •• Actively identifying demand gaps in new markets through research and investigation is another way in which exporting opportunities are identified and seized.

Innovation and exporting Research has shown that innovation and exporting are mutually reinforcing3. Innovation gives companies a competitive edge in export markets, whilst exporting companies are exposed to greater competition, making them more likely to innovate. Nearly all manufacturers are innovating – 96% said they had engaged in some form of innovative activity in the past three years. One in seven companies reported that seeking a new export market will be a driver of innovation activity in the next three years4.

While some manufacturers will actively plan to enter new export markets, others expand their export portfolio in response to new opportunities or challenges. A push or pull to move into exporting could come from a lack of opportunities in existing markets, an approach by a new customer in a new market, or existing customers entering new markets. Factors driving reactionary exporters can include the following: •• Market saturation can push a company to look to markets further afield. As home or existing markets become saturated, companies may need to look to attract new customers from new markets in order to continue growing their production and expanding their business.

Competition

Innovation

Export

Competitive edge

•• Existing customers entering new export markets can also be a catalyst for a company exporting to a new market. Supply chains can be taken along if their customers want to continue to purchase from a known, valued or quality supplier. •• New customers can be another pull factor leading a company to enter a new export market. Word of mouth, internet presence or research by a purchaser can result in a manufacturer beginning to export to a previously untargeted market.

Enterprise Research Council, SME Exporting, Innovation and Growth, 2013 EEF Innovation Survey, 2013

3 4

6LA

Job No: 17100

Proof Event: 11

600

Customer: EEF

Project Title: Export Insights

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA T: 0207 055 6500 F: 020 7055 6600

Tracking the Export Journey February 2014 6

Berck Limited Based in the West Midlands, Berck Limited is a manufacturer and supplier of metal pressings and metal and plastic subassemblies. Around half of the company’s work is for the automotive sector and the remaining half is split across numerous other areas including aerospace and electronics. The company has 70 employees, and more than half of production is exported.

UKTI to identify new markets as well as to uncover legal issues around entering these new markets. The rationale for identifying new markets tends to revolve around the automotive side of the business – i.e. typically to places where OEMs are located. Furthermore, local embassies have been used as a source of local knowledge for the identified markets.

Historically, export orders have typically been by ‘default’ – not arising as a result of a strategy. For example, the company made a part for a large automotive supplier in the UK; the supplier then required this part in India rather than the UK location, which resulted in the company starting to export to this market.

Being strategic about exporting is a relatively new experience for the firm – they are accessing the support available to them but they are a little unsure at this stage as to what else may be required or if there is an uneven playing field in relation to international competitors.

Export orders have also come about through word of mouth. Berck supplies parts to a large group that has a plant in Portugal. One of the group’s competitors in Portugal requested that Berck supply similar parts to them. As this order was unprompted, it is suspected that this order arose through employees of the respective companies talking to each other. Today, the company exports to nearly 20 markets. Berck has now begun to look at exporting as part of their strategy. The company is working with

Job No: 17100

Proof Event: 11

Customer: EEF

Project Title: Export Insights

Andy Jackson, Managing Director, noted in our discussion that it is important to understand a market, its culture and the opportunities available. The Indian market preference, for example, is to source parts made locally which may suggest limited export opportunities; however, research in the company’s area of expertise has shown that there does not appear to be a local supplier, and so an opportunity to export exists. Additionally, the company is using its website to try to attract export partners to become agents in countries not yet represented by Berck.

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA

Job N

T: 0207 055 6500 F: 020 7055 6600

Custo

Tracking the Export Journey February 2014 7

Which markets and how many? Key points on the export journey A FOCUS ON GROWING EXPORTS

MAKING CONTACTS, SECURING CUSTOMERS

WHICH MARKETS, HOW MANY?

KEEPING UP WITH CHANGE

•• UK manufacturers have significantly expanded their export presence in the BRIC economies, but that has not been the first port of call for all. •• Strategies on determining which markets offer the greatest potential vary depending on sector, and on changing market dynamics in emerging markets. •• Manufacturers themselves are considering opportunities far and wide, but they are also finding success by utilising the information and expertise of agencies such as UKTI for research and sign posting. A whole host of different markets were identified as upcoming priorities for manufacturers looking to grow by selling to customers in new geographical locations. In a recent survey by Barclays5, the top ten geographic opportunities for exporting spanned every continent, with countries including Brazil, Indonesia and Australia. A close look at official export statistics reveals that countries that have recorded double-digit growth in export sales by UK-based manufacturers since the end of the 2008/9 recession extend from Thailand (94%) and Malaysia (24%) in the East to Nigeria (30%) and Kenya (54%) in the South.

As the data indicates, it is not just market size or recent growth performance that determines export market selection. Developed economies in Europe and North America remain key targets for some UK companies. While overall economic prospects are at best solid rather than spectacular, the regulatory hurdles and risks of selling to customers in these developed economies are lower relative to many faster-growing, emerging markets. There will also be strong sectoral determinants for new market-minded companies, with some emerging markets offering decent sales prospects because of major infrastructure investments underway or in the pipeline, or because of decisions to build particular specialisms.

Barclays: Exploring Expansion

6LA

Job No: 17100

Proof Event: 11

600

Customer: EEF

Project Title: Export Insights

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA T: 0207 055 6500 F: 020 7055 6600

Tracking the Export Journey February 2014 8

Table 1

Export plans and opportunities % of manufacturers planning to export in next 12 months

% growth in UK manufactured exports 2010-2012

Value of Economic manufactured exports performance £bn % change in GDP 2012

Brazil

2.4

0.9

33.4

2.2

Germany

25.4

0.9

India

3.7

4.0

Australia

4.1

3.6

France

15.3

0.0

South Africa

-11

2.1

2.5

Russia

5.2

3.4

Indonesia

0.5

6.2

China

8.2

7.8

Sector opportunities

Source: UK Trade Info

The shifting dynamics of market opportunity The structure and location of manufacturing value chains are changing all the time. China is and will remain a significant player in global manufacturing, but increasing costs, labour shortages and logistics are raising the attractiveness of neighbours with lower labour costs. If production is shifting, opportunities for UK manufacturers can follow. It is not just economic factors that are at play in some emerging markets – for example, government priorities on issues such as healthcare and infrastructure can move at a fast pace. The UK healthcare sector is going from strength to strength in overseas markets. In South America, demand for UK-manufactured medical devices has increased fivefold over the past decade. South American markets are regarded as challenging, but they have begun to open up as customers look further than North American markets for suppliers. This was the experience of two of our interviewees who identified market potential and attended trade missions and specialist exhibitions to meet customers, agents and distributors on the ground. We have heard of similar approaches by companies in sectors such as automotive and aerospace, where a focus on the development of sector capabilities has

Job No: 17100

Proof Event: 11

Customer: EEF

Project Title: Export Insights

Large UK exposure

Growth potential sparked interest in markets such as Turkey and South Africa for automotive, and Brazil for aerospace. Chart 2

Incremental increases in market involvement % of manufacturing companies involved in market % 100

60 40

2013

86 84

2012

59 56 44

38 37

20 0

Africa

Asia

Eurozone

Other Europe

Middle East

North America

South America

Source: EEF Executive Surveys

Outside agencies can point in the right direction Agencies such as UKTI can also provide insight into these sector specialisms. On-the-ground intelligence from overseas embassies and consulates, tailored market reports, such as OMIS (Overseas Market Introduction

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA

Job N

T: 0207 055 6500 F: 020 7055 6600

Custo

Tracking the Export Journey February 2014 9

Service) and UKTI’s Business Opportunities Alerts service, can also help narrow the field.

What is OMIS? UK Trade & Investment’s Overseas Market Introduction Service (OMIS) allows firms to use the services of trade teams located in UK embassies, high commissions and consulates around the world. Staff based overseas have local language skills, market knowledge and extensive political and commercial contacts. The service is available for first-time or experienced exporters, and a range of components can be put together to suit the needs of a company. A package may include market and sector advice, analysis of market entry strategies, support during overseas visits, and identification of potential business partners. Find out more here: www.ukti.gov.uk/export/howwehelp/ overseasmarketintroductionservice.html6

Finding out about ‘Business Opportunities’ One avenue to help manufacturers find out about businesses opportunities overseas is the UKTI Business Opportunity Alerts service. Around 400 Business Opportunities are published across all sectors and in more than 100 markets each month. Companies can register to be put in contact with the companies who have posted these opportunities: www.ukti.gov.uk/fr_fr/export/howwehelp/ businessopportunityalerts.html7

about new markets – some of the big ones were regulations (cited by 41% as a barrier), knowledge of market (34%) and finding contacts and customers (31%). The most positive responses were from those companies that: •• have a longer-standing relationship with local UKTI contacts •• manage the relationship to obtain the information they need, when they need it •• use a multi-pronged approach to using UK and overseas support to understand market trends and the practicalities of entering a specific market. Separate research for UKTI shows that their support has made a difference to many companies: Chart 3

Export plans and UKTI use % of companies % Non-UKTI users

UKTI users

60 50 40 30 20 10 0 Plans to grow

No. of markets to increase

Export share of turnover to increase

Source: UKTI, Barriers to Internationalisation (2013)

We found that companies use different routes to UKTI support. Some identify priority markets themselves and gain greater insight from overseas posts and UK-based expertise; others look for guidance depending on their sector strengths and technical capabilities. Feedback was somewhat mixed with regard to UKTI outputs. The perception among some companies was that support can be too generic for manufacturers operating in niche areas or with highly technical specifications. However, UKTI can help overcome some of the hurdles identified by companies thinking

Customers, competitors and complementary products A number of manufacturers have followed customers, companies selling complementary products and even competitors into new markets. Manufacturers with good relationships with customers in the UK market, or indeed in overseas markets, can expand their export presence when these existing customers choose to establish themselves in new countries and want to continue that relationship. For

Accessed 12 January 2014 Accessed 12 January 2014

6 7

6LA

Job No: 17100

Proof Event: 11

600

Customer: EEF

Project Title: Export Insights

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA T: 0207 055 6500 F: 020 7055 6600

Tracking the Export Journey February 2014 10

companies that are an accredited industry supplier, that have a collaborative relationship with their customer or that have carved out a particular industry niche, following the customer can potentially provide ‘rich pickings’ in new markets. Our research identified companies that have followed customers, as well as organisations with an eye on what their competitors are doing in new markets. One investment goods manufacturer we interviewed supplements their own research with support they receive from UKTI on market

opportunities, attendance at industry exhibitions and intelligence on where competitors are doing well. If the market is big enough, there may be potential for another UK entrant. Determining which markets are right, which will be profitable and how to prioritise potential markets can be resource intensive and will almost certainly require internal and external support. This part of the journey goes hand in hand with making contacts and securing customers. We will look at this in the next section.

Makin Metal Powders (UK) Limited Makin Metal Powders (UK) Limited is a UKowned SME with 41 employees. Exports account for 74% of turnover. The company manufactures non-ferrous metal powders, which are very technically specific products. These are used in areas such as automotive for sintered components, steel-backed bearings, friction parts (clutches and brakes), carbon brushes and electronic components as well as filters. The technical specifications and high quality of the product are areas of competitive advantage. The company is very systematic and targeted in the way it approaches its export sales, and this comes from having a very technical product with specific uses and limited competitors. The company has good knowledge about its competitors. Makin Metal Powders (UK) Limited exports mainly to Europe, but it also sells a fair amount to Asia, the Far East and North America. Latin America is a small market at the moment but the company is seeing growth, especially in Brazil and Mexico due to the automotive sector. The company gains understanding of markets by using input/output statistics on product use by country, by speaking to customers, by reading relevant sectoral publications and by using information about visitors to its website. Makin Metal Powders (UK) also takes advantage of support from UKTI by maintaining a good relationship with its local advisor as well as receiving funding for attending exhibitions, attending seminars and obtaining information on possible product users in overseas locations. The company has also found overseas UKTI staff to be helpful with regard to logistical issues, such as transport and travel arrangements when planning visits, and embassy staff have also provided useful in-country support and advice.

Job No: 17100

Proof Event: 11

Customer: EEF

Project Title: Export Insights

The company also attends overseas trade shows and exhibitions and actively promotes the shows they are attending on their website. The Managing Director, John Boden, emphasised the importance of meeting customers face-to-face and obtaining an understanding of their needs as well as being able to explain the technical nature of the products and the unique chemical make-up required for different uses. These critical meetings provide opportunities to understand the requirements of the customers and to ensure that Makin can provide the services the customers are seeking. New product development can be identified and promoted through a close working relationship with customers. Makin Metal Powders believes that the use of agents in country is a critical element in successfully being able to promote the company and its products, as the agents can identify potential new customers, introduce Makin Metal Powders and then accompany a company representative to start the sales process. It can be a lengthy period of time from enquiry to order; it is not an overnight process. A great deal of time and effort goes into converting potential sales into orders, with research and visits, but for the company this is essential as growth will come from export sales. Given its size, Makin Metal Powders (UK) Limited must make the most of its time in country. It will plan to visit several potential customers as well as maintain relationships with agents and existing customers on an overseas trip. For this, the company stressed the need for as much notice as possible for organised trade visits – the more they can plan and arrange appointments, the more they can achieve from a trip.

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA

Job N

T: 0207 055 6500 F: 020 7055 6600

Custo

Tracking the Export Journey February 2014 11

Making contacts, securing customers Key points on the export journey A FOCUS ON GROWING EXPORTS

WHICH MARKETS, HOW MANY?

MAKING CONTACTS, SECURING CUSTOMERS

KEEPING UP WITH CHANGE

•• Manufacturers agree that meeting contacts and customers in country is seen as critical in securing orders in new markets. •• We see companies using a combination of direct exporting from the UK and agents and distributors to meet export ambitions. •• Trade shows, exhibitions and UKTI-facilitated contacts are all means of connecting to potential customers. More manufacturers are also developing an internet presence both to promote their products overseas and to attract interest from agents or distributors. Exporting from a UK base is a successful strategy for manufacturers, but when making contacts and finding new customers, networking is essential. Using in-country contacts is particularly important for companies when exporting, either to a new market or to increase penetration in a current one. The task of finding and building relationships with these contacts must be achieved first, before seeing fruitful gains from sales.

Being seen and forging links The majority of companies that we spoke to expressed the importance of ‘getting in front of people’ as part of the strategy for successful exporting – obviously with customers but also with agents, distributors, in-country experts, and those providing support and advice. It is important not just for the purpose of meeting people but also for maintaining relationships in order to have sustainable export orders rather than just transactional one-off purchases. Our interviews highlighted one approach that generates good returns, which is attending and having representation at trade shows and exhibitions.

Nearly all the manufacturers who took part in our discussions reported the benefits of doing this, although they vary in their approach. Some firms choose to exhibit at one or two large exhibitions a year, while others go to smaller shows but much more frequently: in one company’s case, approximately one every month. Some companies may choose to exhibit at some and attend others, depending on time and cost constraints. Trade shows and exhibitions are an important networking activity for manufacturers, be it attending them or having a stand. Some manufacturers report using UKTI support in order to attend. The Tradeshow Access Programme (TAP) provides grant support for eligible SME firms to attend trade shows. Participation is usually as part of a group and led by an Accredited Trade Association, which can be helpful for inexperienced businesses. A calendar of events and advice on how to make the most of exhibitions can be found on the UKTI website: www.ukti.gov.uk/export/ howwehelp/tradefairsexhibitions.html8

Accessed 12 January 2014

6LA

Job No: 17100

Proof Event: 11

600

Customer: EEF

Project Title: Export Insights

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA T: 0207 055 6500 F: 020 7055 6600

Tracking the Export Journey February 2014 12

Network, network, network Networking is part and parcel of trade shows, exhibitions and other activities whilst visiting a potential new market. The manufacturers we spoke to also commented on the role of networking whilst at home, whether maintaining a regular dialogue with a local UKTI advisor or using trade groups within trade associations and business groups. There was a strong view from firms that speaking with and discussing experiences of exporting with peers is extremely beneficial, but there are not enough opportunities to do so. Not only can other manufacturers pass on hints and tips about what they found helpful to do, or bust myths about preconceptions, but they can also sometimes pinpoint a specific contact within a market – even if the company is within a different sector. Indeed, a number of company representatives we spoke to said they felt that experienced exporters are in an ideal place to share their experiences with inexperienced firms or those that are new to exporting. In addition, they can encourage and instil confidence in inexperienced businesses if they feel that exporting is difficult or fraught with too many barriers to overcome. Open to Export is an online community for SMEs who are seeking help, advice and support in exporting from the UK. The website is a source of information and advice on exporting products and services, in the form of articles, events and opportunities. The content is produced and contributed by users, partner organisations and key contributors. Information and advice can be researched by topic or country, and events and opportunities can be browsed along with links to further help and advice. There is an area for Q&As, where users can ask export-related questions. A whole host of advisors and industry experts are available to provide answers and assistance to queries. Businesses who feel they have expertise to offer or who are interested in finding answers to their concerns and questions can register and start participating: http://opentoexport.com/9

Agents and distributors are a successful sales method Of the companies we spoke to, most used agents and distributors in order to successfully sell their products overseas. Agents will work on behalf of a company to find opportunities through networking and research, to build relationships with potential customers, to promote products and to secure orders. Distributors will buy and hold stock from a company to sell on in market. UKTI research has shown that this approach is slightly more likely to be used further from home, with over half using them in Asia and Latin America, although two-fifths of companies reported using them in Europe. Many companies report difficulty in finding the right person and pursue many avenues in order to meet potential and suitable contacts for a market – from exhibitions and trade shows to advertising on their website, and from direct approaches from interested parties to suggested contacts from peers, embassies and UKTI. Many companies reported successful meetings set up in country by embassies and UKTI, where they have been able to meet several potential agent or distributor candidates at once.

Knowledge and trust Manufacturers identified that it is important to have trusted and strong relationships with their agents and distributors, especially in the case of selling a very technical product. Indeed, one firm said the selection of an appropriate representative is ‘critical to success’. Companies must be able to be confident that the agent or distributor has a good level of product knowledge, understands the market and has awareness of competitors. In order to ensure success, many firms bring agents and distributors to the UK for training in their products, processes and company. Of course, this is not the only method for sales. A UKTI survey10 found that 12% of companies use only agents and distributors. The approach usually goes hand in hand with direct exporting from the UK.

Accessed 12 January 2014 UK Trade & Investment International Business Strategies, Barriers & Awareness Monitoring Survey 2013

Job No: 17100

Proof Event: 11

Customer: EEF

Project Title: Export Insights

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA

Job N

T: 0207 055 6500 F: 020 7055 6600

Custo

Tracking the Export Journey February 2014 13

Chart 4

Manufacturing top 10 Top ten markets by value, Jan-Oct 2013 £bn 30

•• Developed economies remain the top destinations for UK-manufactured exports, with the US as the biggest single market.

25 20

•• China has moved from being the UK’s 11th largest market in 2007 to 7th position in 2013.

15 10

•• Russia and India could enter the top ten in the next few years (currently 12th and 14th).

Sw i

Ita

a in

m iu

la Ire

er th

Fr an

an y rm

Source: UKtradeinfo

Worldwide exports, worldwide web An internet presence is very important for manufacturers that are exporting. After initial face-to-face meetings and networking, potential customers can have a raft of information about products, the company and services at their fingertips. All the companies we spoke to have a website that offers some element of information for overseas customers or contacts, from being able to view distributors and agents to being available in several languages (up to 30, thanks to website translation plug-in software). Many companies also offered news on trade shows that the company will be visiting; adverts for new agents, distributors and partners; and links to websites specifically for different markets.

6LA

Job No: 17100

Proof Event: 11

600

Customer: EEF

Project Title: Export Insights

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA T: 0207 055 6500 F: 020 7055 6600

Tracking the Export Journey February 2014 14

Leeds Test Objects Limited Leeds Test Objects Limited manufactures Quality Assurance products for testing medical imaging equipment. Together with three other distribution companies under the Miro House banner, it employs 17 people. Exporting is an important part of the business, with approximately 70% of turnover exported to the European Union, the US, Japan, China, Indonesia, the Middle East and Brazil. The business has grown considerably in the last 13 years and is now ten times larger. Leeds Test Objects Limited started the export journey by setting up distributors in Europe. Their first distributor approached the company directly and, since then, the business has expanded its distribution worldwide by both finding companies distributing complementary products, and selling directly via email. With the development of their strong brand, the company is finding that distributors now often approach it directly, or will make contact through

exhibitions. Distributors are invited to the UK once a year for two days’ product training. In the last two years individuals have come, at their own expense, from Japan, USA, China, Indonesia, Singapore, India, Netherlands, Finland, France, Italy, Spain, Germany and Sweden. Mike Bannard, Chairman of Miro House, said the company is continuously looking to improve the performance of markets that have not performed particularly well, and is also looking to new markets. Brazil is the newest market to which the company is exporting, and India, South Africa and Australia have been identified as having further potential for expansion. Leeds Test Objects Limited initially found it a challenge to realise export growth due to its size; however, UKTI has been useful to the company, particularly when entering a market for the first time. OMIS reports, facilitating meetings with distributors and financing trips abroad have all helped the company enter new markets.

Group Rhodes Founded in 1824, the seven business units of Group Rhodes manufacture specialist machinery for a variety of advanced engineering sectors world-wide. The organisation employs around 240 people across five sites in the UK and India, and highlights internationalisation as one of the three core strategies of the business. Rhodes has been internationally focused for many years, having opened an office in Paris as early as 1910. On average, the group exports to around 30 countries annually, but due to its niche portfolio mix and product lifecycle, the 30 countries will change from year to year. Rhodes views the BRIC countries as key to its growth – especially in the aerospace market. At the moment, the company’s board members (e.g. Managing Director, Sales Director, and Technical Director) have been fulfilling export duties, but they recognise the need to be more strategic internationally. Although the firm already holds a Queen’s Award for Enterprise in the International Trade category, they are recruiting an additional Export Manager in order to operate a more structured approach to internationalisation. Rhodes uses agents in-country and believes it is essential to have representatives that are technically competent due to the nature of its portfolio, but it also recognises that appointing the right person is only part of the market/technology mix that is needed to develop a new territory.

Job No: 17100

Proof Event: 11

Customer: EEF

Project Title: Export Insights

Mark Ridgway, Managing Director of Group Rhodes, stresses the importance of networking in making international activity successful. He believes it to be important that the company keeps its activity rate high in overseas markets, making and developing international contacts; when we spoke the business had three visits in six weeks planned to Brazil. The business also utilises appropriate grants and funding streams to take part in trade missions in order to further enhance activity levels. Rhodes believes that building up the organisation’s brand and reputation is vital, and once their name is trusted in one product sector, this standing tends to spill over to other market sectors in the territory concerned. The Rhodes team helps this process by attending conferences and the firm submits technical papers on new technology at relevant international symposiums, sponsoring events where budgets allow. Rhodes is also keen to work with in-country business groups such as the British Business Group in India, at whose conference Mark spoke in Mumbai in 2013. Rhodes prefers to undertake numerous small exhibitions (on average around 12 each year) rather than take large stands at just one or two shows. It also collaborates with other UK companies in selected international markets, and the businesses represent each other in territories where one party is weak.

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA

Job N

T: 0207 055 6500 F: 020 7055 6600

Custo

Tracking the Export Journey February 2014 15

Keeping up with change Key points on the export journey A FOCUS ON GROWING EXPORTS

WHICH MARKETS, HOW MANY?

MAKING CONTACTS, SECURING CUSTOMERS

KEEPING UP WITH CHANGE •• Market opportunities and risks are continuously shifting. A closed market today could provide huge growth potential tomorrow. •• Similarly, rules and customs procedures, especially in emerging markets, can be more subject to change than in developed ones. •• Companies are building networks and information sources to be nimble when change occurs.

The export journey does not end with finding a customer. The market is changeable, and continual adaptation is needed to keep up with the pace of technological change. When exporting, companies must meet product standards, become certified and comply with relevant regulations, all of which can change, especially in fast-moving emerging markets. The challenge for exporters is to make sure their products remain marketable.

Product life cycles have also been shortening. Intensifying competition from emerging and lower-cost manufacturing bases is partially responsible for driving this. The dissemination of products, technological adoption and increasing innovation in these markets means that UK manufacturers are facing more and more pressure to innovate in order to protect and maintain their competitive advantage.

Technology and customer needs do not stand still

As well as fortifying their market position, continual innovation is another important tool that manufacturers are using to improve relationships with customers and to meet their clients’ changing needs. A recent EEF survey11 shows that three-quarters of manufacturers were innovating to help satisfy existing customers.

Through time, the technological frontier has been constantly moving and expanding, and customers’ needs change along with that. In order for companies to stay in the game, particularly for companies that are market leaders, continual product development and innovation is necessary.

EEF Innovation Monitor survey 2013

6LA

Job No: 17100

Proof Event: 11

600

Customer: EEF

Project Title: Export Insights

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA T: 0207 055 6500 F: 020 7055 6600

Tracking the Export Journey February 2014 16

Chart 5

High-growth markets % of companies not involved in market citing likelihood of doing business there in next two years Brazil China India

•• These generally large markets offer big potential, with relatively young populations, increasing spending power and ambitious infrastructure plans.

Mexico Russia South Africa Turkey UAE/Saudi Arabia

•• Growth forecasts for 2014 look positive, ranging from China at 7.3%, India at 4.9% and Turkey at 3.5%

•• UKTI research shows that 43% of companies are already involved in at least one high-growth market.

Source: UKTI, EEF calculations

Regulations are a moving feast Regulations, standards, certification and customs procedures all form part of the red tape that manufacturers must navigate in the exporting process. Regulations and standardisations evolve in all countries and, if manufacturers are not aware of changes, can cause delays in product movement or can mean the company incurs fines. In fast-changing emerging markets, these trade barriers can evolve quite rapidly. In developed economies the changes tend to be a lot slower, sometimes lagging behind technological development. Regardless of the speed of change, however, exporters must stay abreast of all developments and be flexible enough to adapt to new standards and procedures.

Trade negotiations and deals contribute to the changing regulatory landscape Trade deals are another way in which the exporting landscape changes over time. Free trade agreements (FTAs) often lead to lower tariffs and barriers to trade, such as standardisation of product standards and customs procedures, and can significantly open up trade between signatory countries. 12

Trade deals have the potential to reduce barriers to trade The European Union, which negotiates trade deals on behalf of all member states, has entered FTAs with South Korea, Chile, Mexico and South Africa since 2000. The most recent EU–South Korea FTA has had an immediate and sizeable impact upon the UK’s trade relationship with South Korea. UK exports to the country grew by more than 80% in 2012 after the FTA came into force, growing from £2.5 billion in 2011 to £4.5 billion in 2012. The UK also ran a trade surplus of £1.4 billion with South Korea for the first time in 2012 after running trade deficits since the mid-1990s.12 The EU is in the process of negotiating many deals with other countries and regions including Canada, Japan, Singapore, India, and Mercosur, which includes Argentina, Brazil, Uruguay, Paraguay and Venezuela.

Source: National Statistics

Job No: 17100

Proof Event: 11

Customer: EEF

Project Title: Export Insights

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA

Job N

T: 0207 055 6500 F: 020 7055 6600

Custo

Tracking the Export Journey February 2014 17

Staying plugged into networks is important Keeping up with change is not easy but there is support available to exporters in the form of in-country expertise from UKTI and embassy specialists. Just over half of companies interviewed had used the UKTI’s Overseas Market Introduction Service (OMIS) to help them develop background information, establish an export strategy, or identify relationships in new export markets.

IML Labels & Systems Ltd IML Labels & Systems Ltd is an established leader in the high-performance labelling industry, specifically in the manufacturing of high-temperature tags for identification and traceability of steel and other metals. The metals industry remains the company’s biggest market, but it has also diversified into other industry sectors including chemicals, construction, healthcare and horticulture. The company employs around 50 people and has a turnover of £4.5 million. When IML Labels wants to export to a new market, the company starts with internal desk research. This includes researching industries, talking to customers involved in those markets and identifying whether there is a need that IML Labels’ product range could fulfil. Once this need has been identified, the company then undertakes the task of recruiting a reliable distributor, through either exhibitions or a direct approach.

6LA

Job No: 17100

Proof Event: 11

600

Customer: EEF

Project Title: Export Insights

Sue Elwis, Export Manager at IML Labels, said the company has used UKTI to access market statistics, as well as market visit support and grants. UKTI has also supported the company in exhibiting in other countries, which has been a useful way to build contacts in new countries. UKTI has been unable to help on occasion, but they have directed IML Labels to other sources of information and advice. IML’s local Chamber of Commerce has also been a useful source of information, especially with regard to export documentation and support concerning regulation. Exporting is now an explicit part of the company’s growth strategy. When demand from UK steel mills was declined, IML Labels looked abroad for more opportunities. Egypt was IML’s first export market, prompting the company to set up a sales office in Alexandria. The company’s main export destinations now include Saudi Arabia, Qatar, Germany, France, Spain, Portugal, Sweden and the Netherlands, amongst others. Exports currently account for 10–12% of turnover.

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA T: 0207 055 6500 F: 020 7055 6600

Tracking the Export Journey February 2014 18

Viewpoint from Barclays The value that manufacturing brings to the UK is evident: it is a key constituent to a healthy economy, representing approximately 11% of GDP and 9% of employment. The government has been consistently clear in its commitment to central initiatives, underlining the importance of a manufacturing export-led recovery. Given the current economic climate, a focus on domestic strategies and procurement is understandable; however, manufacturers should not be afraid to operate more globally. UK manufacturing is widely viewed as a vital component in the overall global manufacturing supply chain. From discussions with our clients, we have noted a distinct inclination of UK manufacturers to choose to export to markets that are closer to home – particularly the Eurozone. Over recent months we have seen our manufacturing clients taking their goods further afield to faster-growing emerging market economies where the export sales potential is far greater.

At Barclays, we see one of our main roles as encouraging our manufacturing clients to have the confidence to export. That confidence is built around two main factors: firstly, securing the payment mechanism, using trade finance to ensure payment and managing the profit margin within the sale by protecting the budgeted FX rate; and secondly, enabling our clients to benefit from the experience we have built up from negotiating contracts in those foreign territories. Many of our clients who have ‘taken the leap’ to export, and who have carried out the appropriate preparations, have benefited from the opportunity, and many wish they had started their export journey earlier. It is, therefore, clear that a focus on investment in exploring new markets will help to drive further growth and success for individual companies – and the sector as a whole. Mike Rigby, Head of Manufacturing, Transport and Logistics at Barclays

The output of this report clearly indicates the appetite within the sector to export and grow internationally, but many are still looking for the ‘how’. For this reason, the five key takeaways that follow are especially important. The two that stand out for me are being on the ground to understand your market, and networking – i.e. investing time and money to really understand the market, its customers and agents.

Job No: 17100

Proof Event: 11

Customer: EEF

Project Title: Export Insights

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA

Job N

T: 0207 055 6500 F: 020 7055 6600

Custo

Tracking the Export Journey February 2014 19

Key takeaways The export ‘journey’ is perhaps a misnomer – it may certainly be a journey in terms of entering and securing the first order in one market, or gaining a new customer, but the overall export activity in that market, or of a company, does not stop and does not happen in isolation. A recent Barclays survey of manufacturers showed that 37% of respondents had been exporting for more than 30 years13.

Constant activity Exporting is good for business: companies that export tend to grow faster, are more strategic, have higher turnover and employ more people than their non-exporting counterparts. This growth allows companies to plough more resources back into their export activity, to search for the next possible market and opportunity, to research and visit customers, and to recruit and train overseas contacts.

Relationship management The contacts and relationships built in order to secure orders in markets must be upheld and maintained. Agents and distributors must be kept up to date with product changes and launches, and may require training and briefing. The companies we spoke to felt it was necessary to maintain regular contact with their UKTI local advisor in order to achieve the maximum benefit from their expertise and advice, as well as to hear about overseas missions and exhibitions.

New market entry Growth in exports will not just come from companies taking the first step overseas; it will also come from confident, experienced companies expanding further into existing markets, where exporting is ingrained in business processes and culture. A multi-pronged approach to the internationalisation of a company is beneficial – expanding activity in one market whilst entering another.

Our research has revealed that UK manufacturers are working hard to grow their businesses, with a strong focus on building a greater presence in overseas markets. There is no straightforward road map to successful exporting, but there are a few pointers we have picked up from those who are doing it successfully.

1. UKTI does more than you know Around half of exporters use UKTI services. Of the remainder, some are not aware of what is on offer and others are not aware of the breadth of services available. For companies wanting to understand more about the practicalities of selling to a market, looking to meet contacts in a market, needing some financial support to exhibit overseas or simply interested in overseas business opportunities, there will be a way in which UKTI can help.

2. Be on the ground to understand your market Manufacturers stress the importance of making contact with customers, agents and distributors in the export market itself. Attending trade shows and exhibitions is one route that has proved successful. Tapping into UK expertise overseas via UKTI and embassies is another that has been shown to deliver results. It is rarely a one-off trip to build relationships, but it is still one of the most effective ways to build trust and local knowledge. The world economy does not stand still, and trends are changing all the time, opening up new opportunities and bringing new competitors. UK exporters must stay ahead of the game by understanding the big factors that are impacting on their customers, sectors or markets. This can be aided by good local knowledge and contacts.

Barclays: Exploring Expansion

6LA

Job No: 17100

Proof Event: 11

600

Customer: EEF

Project Title: Export Insights

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA T: 0207 055 6500 F: 020 7055 6600

Tracking the Export Journey February 2014 20

3. Be networked

5. Be confident; be an exporter

Companies report real value in discussing exporting with similar firms in order to better understand the opportunities and pitfalls in particular markets. If more manufacturers were to engage with customers, support their supply chain and help give some confidence to others looking at new markets, the UK could be making further inroads into new markets and the ambitious government target to double UK exports by 2020.

In the UK, we have many thousands of world-class companies offering products and services to customers in every corner of the globe. We have great brands, a reputation for quality and innovation, and an improving record of capitalising on these strengths in export markets. We are seeing more companies taking a leap into new markets all the time, with a pay-off in growing turnover and productivity. You can do it too.

It is not just about face-to-face engagement; having an online presence to connect with potential customers, agents and distributors can provide a further edge in export strategies.

4. Speak to your bank early about export finance Most exporters will need some financial support for their overseas activities. This can range from credit guarantees or insurance, foreign exchange products or working capital support to fulfil orders. In many instances companies can access what they need from private providers – mainly banks, but it is advisable to engage early with your bank to discuss the options. For companies that are not able to obtain what they need from the private market, UK Export Finance, a government agency, is increasing its portfolio of products and guarantees to fill the gap for UK exports. Some companies we spoke to are considering whether UK Export Finance products might be right for them. Details about what they can offer can be found on their website www.gov.uk/government/organisations/ uk-export-finance,14 or there are dedicated advisers in all regions across the UK.

Accessed 12 January 2014

Job No: 17100

Proof Event: 11

Customer: EEF

Project Title: Export Insights

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA

Job N

T: 0207 055 6500 F: 020 7055 6600

Custo

About us EEF is dedicated to the future of manufacturing. Everything we do is designed to help manufacturing businesses evolve, innovate and compete in a fast‑changing world. With our unique combination of business services, government representation and industry intelligence, no other organisation is better placed to provide the skills, knowledge and networks they need to thrive.

To find out more about this report, contact:

best interests of manufacturing, that encourage a high growth industry and boost its ability to make a positive contribution to the UK’s real economy.

Lee Hopley Chief Economist 020 7654 1537 lhopley@eef.org.uk Madeleine Scott Senior Policy Researcher 020 7654 1502 mscott@eef.org.uk

Our policy work delivers real business value for our members, giving us a unique insight into the way changing legislation will affect their business. This insight, complemented by intelligence gathered through our ongoing We work with the UK’s member research and networking manufacturers from the largest programmes, informs our broad to the smallest, to help them portfolio of services; services work better, compete harder that unlock business potential and innovate faster. Because we by creating highly productive understand manufacturers so well, workplaces in which innovation, policy makers trust our advice and creativity and competitiveness welcome our involvement in their can thrive. deliberations. We work with them to create policies that are in the

Rachel Pettigrew Senior Economist 020 7654 1585 rpettigrew@eef.org.uk

Thank you to the EEF member companies who spoke to us for this research. Contributing to EEF research helps us to accurately reflect the trends and behaviours that shape the UK manufacturing sector. If you would like to participate in future research, please contact Amanda Norris in our Information and Research team anorris@eef.org.uk

EEF Information Line 0845 250 1333 infoline@eef.org.uk

About Barclays To find out more contact: Mike Rigby Head of Manufacturing, Transport and Logistics +44 (0) 7825 907 254 michael.rigby@barclays.com

Barclays moves, lends, invests and protects money for customers and clients worldwide. With over 300 years of history and expertise in banking, we operate in over 50 countries and employ over 140,000 people. Our clients also benefit from access to the breadth of expertise across Barclays. We’re one of the largest financial services providers in the world, and are also engaged in retail banking, credit cards, corporate and investment banking, and wealth management.

For more than a decade, Barclays has been at the forefront in providing support, funding and specialist advice for the Manufacturing sector. Our Manufacturing, Transport and Logistics team covers the whole value chain, from raw materials and mining, processing and manufacturing, to providing transport and warehousing facilities. At every stage we can offer experienced Relationship Directors who understand the challenges and opportunities your business faces.

6LA

Job No: 17100

Proof Event: 11

600

Customer: EEF

Project Title: Export Insights

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA T: 0207 055 6500 F: 020 7055 6600

We foster enterprise and evolution to keep your business competitive, dynamic and future focused www.eef.org.uk

Job No: 17100

Proof Event: 11

Customer: EEF

Project Title: Export Insights

Black Line Level: 0

Park Communications Ltd Alpine Way London E6 6LA T: 0207 055 6500 F: 020 7055 6600