The export market is consistently highlighted as one of the key instruments of economic recovery. Christopher Knox looks at how the market is performing and how business support organisation RTC North is helping North East firm's tap into overseas markets.

RECENT figures by HM Revenue & Customs shows that North East manufacturers led the region to its best ever trade performance in 2010, with exports hitting a record total of almost £12bn.

Car maker Nissan’s Wearside plant was at the forefront of the export charge, with a record production year boosting the value of the goods from the region being sold abroad by more than £1bn.

With the British Chamber of Commerce (BCC) downgrading its growth 2011 UK growth forecasts from 1.9% to 1.4%, the Government is placing more and more emphasis on the merits of trading overseas.

It plans to introduce new measures to help bosses capitalise on overseas markets, including an export working capital scheme, to be set up by the Export Credits Guarantee Department, which will be able to share credit risk with banks, allowing them to lend to more businesses in the region.

The Department for Business Innovation and Skills will also offer export advice worth up to £1m to SMEs as part of the scheme to help encourage business to trade abroad.

However, there is still reluctance among smaller firms to invest in exports, with the increase in trade mostly down to the region’s larger manufacturers.

With the price of energy and raw materials continuing to increase and uncertainty over the impact of Government cuts still a factor, many smaller businesses have decided to tighten their spending even further and concentrate on their existing domestic sales rather than risking a move into new territories.

The BCC revealed in February that nearly 70% of small and medium-sized businesses in the UK do not export and are not likely to in the future.

The survey of 8,000 companies revealed that, despite a buoyant market among larger manufacturers, many areas of the UK economy still lacks an ‘exporting culture’.

David Frost, director general of the BCC, said: “The UK doesn’t provide enough help to small and medium sized exporters, whereas governments in Canada, Germany, France and the USA take more steps to make sure their companies succeed overseas.”

One organisation that is helping smaller companies prove their worth overseas is Sunderland-based RTC North.

The organisation’s international services are built on the success of its R&D Globalisation Programme, which helped 132 companies begin exporting between 2007 and 2009, adding £18m GVA to the region.

Services include advice on how to position your business for international expansion, research into international markets and help in attracting funding.

Gordon Ollivere MBE, chief executive of RTC North, said: “Dealing internationally is no longer the preserve of big companies and with the right kind of help from RTC North, small companies can now minimize the risks.

“Recent research by RBS among UK businesses showed that 69% believe that now is a good time to increase overseas trading, with a similar proportion recognising that export activity will be key to the UK’s economic recovery.”

In the RBS survey over half of respondents stated that easy access to advice from international trade experts would give them more confidence in exporting.

Mr Ollivere said: “The good news is that here in the North East, exactly this type of help is at hand. In small companies international expansion is often thought of as a risky business, but with UK growth forecasts being downgraded, big opportunities now exist in countries like China where the economy is growing at close to 10% per year.”

Research by RTC among businesses in the North East and Yorkshire shows that improving current products or designing and developing new products are the top two priorities cited by over 70% of all the businesses it surveyed.

There were some minor regional variations in the order of preference between these two options, with new products top of the list in the North East, which may be attributed in part to the strong emphasis given to design initiatives in the North East, including RTC’s own Design Network North.

Mr Ollivere points out that such an inward looking attitude to business could be the undoing of many small firms.

He said: “Many firms may be using the little money they have on product development as a way of pulling ahead of their competitors.

“However, with a slow moving economy in the UK, they could suffer declining demand shortly after the product launch.

“It may well be wiser to invest in selling your existing products in markets that are continuing to show impressive growth in the face of the worldwide downturn, markets like China, India and the Middle East.”

RTC North is confident that it can continue to support companies well into the future with its range of services, as well as helping to inspire the next generation of entrepreneurs through its outreach programmes.

However, the business support organisation isn’t immune form the cuts and is now seeking European funding after having its main UK funding stream cut following the announcement that One North East is to be wound up next year.

RTC is now looking for private sector funding to match money from sources such as the European Regional Development Fund, with much of this coming from the organisation itself.

However, RTC said that although it is going through a major period of change in terms of its funding streams, it is still determined to provide the same level of help to the region’s budding inventors and future business leaders keen to look beyond the UK.

Mr Ollivere said: “We are still very much keen to speak to businesses that are looking to tap into the export market.

“We can hold their hand through everything from the initial design of a product, by pairing them up with design partners, to things like access to finance and securing their intellectual property.

“We are involved in a lot of areas and have spread our expertise wide enough to be able to survive the cuts. However, there will be those organisations that are not as fortunate.

“It may mean that we have to increase the charges we make to our clients, as we look to match European funding.

“There may also be some new options open to us through the Regional Growth Fund.”

One thing is for sure, RTC believes that there needs to be a change in culture among small firms if they are to fully take advantage of overseas trade.

“It is a fact that we can’t compete with areas like China when it comes to cheap labour,” said Mr Ollivere. “However, we are strong in areas like design and small components.

“With this in mind, it may be realistic for many firms to set up manufacturing bases overseas to handle things like large fabrication work.

“Although it means creating jobs abroad, having a larger international footprint usually leads to an increase in jobs back in the UK to support future growth.”