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Aiming for straight A's - October 2010

If it was phrased like a school report card, “Could do better” would be the rating given to Scotland’s strategy for international trade by the Parliament’s Economy, Energy & Tourism Committee.

The committee recently published a report which warns that Scotland’s performance in export markets and attracting inward investment is becoming increasingly patchy and that not enough businesses are seeking advice from public sector bodies.

The report was based on findings gathered during an inquiry which saw MSPs travel the length and breadth of the country - including an evidence gathering session in Aberdeen – to listen to local businesses give their views on the level of Government support they receive for international activities.

From that the inquiry concluded that there is a real need for the country’s trade and investment policy to focus more on increasing the number of firms, especially smaller ones that are prepared to grow their businesses in export markets.

It particularly calls on Scottish Development International (SDI) to update its strategy and services to focus more on these firms that see export as the route to success.

But behind the scenes, some of that required step change is already taking place, thanks to a collaborative venture which has just been launched by Scottish Chambers International in association with SDI.

Elsewhere in this publication (P 28), AGCC’s International Director Jon Woodwards outlines the aims and objectives of Smart Exporter, a new programme which will help equip Scottish businesses with the support it needs to help it enter new international markets.

The need to export in order to expand and grow is a scenario which is familiar to many of our businesses here in the North-east. Many are now enjoying huge success in overseas markets and seeing company growth and expansion against what has been an extremely challenging backdrop of a global recession.

Some of the best examples of these were showcased at our Northern Star Business Awards last month. Ace Winches, winner of the Achievement in Internationalisation, said that its success in international markets has played a major role in its development, helping push turnover from £11.9million last year to a projected £16.25 million this year. Over the past 12 months it has done business in Europe, Africa, the Middle East, South America and Russia and its international business grew by 96% in the last financial year with further growth forecast of 42% this year.

ACE is a home grown North-east company which has seen employee numbers more than double and turnover rise dramatically over the past six years – it’s a company which is going places.

Internationalisation could be the key to success for many other businesses in this region and AGCC will continue to actively support and work with both SCI and SDI and the Smart Exporter and other initiatives to ensure that the required support is available from Government.

So here’s hoping that next time the report card comes out on Scotland’s international strategy, its rating will read: “Showing real improvement”

Key findings and conclusions from the Inquiry

• Figures from Ernst & Young show that the volume of manufactured exports has fallen by 30% in the last decade and HM Customs & Excise statistics show that only 5% of UK exporters are based in Scotland, comparing poorly to the fact that around 8% of all VAT-registered firms in the UK are located here.
• Public and private sector initiatives supporting international trade and inward investment should be better joined-up and co-ordinated. SDI should take the lead in working with other bodies, such as the Scottish Council for Development and Industry and Scottish Chambers of Commerce. However, SDI should follow the ‘Heineken Model’ and seek to provide principally those types of services that others do not. It has to focus its efforts and scarce resources where it can make the most impact.
• Scotland needs a bigger global footprint and SDI should provide more help and advice on the ground across a wider set of countries to Scottish companies and to inward investors. SDI and the Scottish Government should establish a bigger network of “trade counsellors” overseas. Given constraints on public budgets, the core principle behind the expansion of SDI’s overseas network should be a ‘maximum coverage for minimum overheads’ approach.
• The Scottish Government should take action to improve the economic advantages that Scotland offers to attract new talent and business, for example, a skilled workforce, education and transport infrastructure.