Manufacturing growth through exports in 2012

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On the 6th March EEF will be hosting the first ever National Manufacturing Conference, in partnership with The Manufacturer.

A key issue for manufacturing in the year ahead – and one that we'll be discussing at the conference – will be how to achieve growth through exports.

Manufacturing is already an outward-looking industry, accounting for roughly half of all UK exports. But 2012 is likely to be a difficult year. The UK's key export market is Europe, and forecasts suggest a contraction in the Eurozone is likely in the year ahead.

However, as we reported in our Executive Survey, UK manufacturers have been working to increase their export presence in fast-growing emerging markets. Although only 7% of the UK's goods exports go to the BRIC economies, the value of exports to these countries has grown by 150% in the last five years, despite the financial crisis.

Approximately 15% of motor vehicles exports go to the BRIC economies and greater exposure to these markets is paying dividends: it is no coincidence that this is one of the strongest performing sectors.

But it is not just ‘BRIC' economies where there are opportunities. For example, exports to the Middle East and North Africa have grown by more than 25% in the last five years. They now account for 5.4% of total UK exports. Sectors with particular exposure to these markets include aerospace, which sent 11% of its total exports to the Middle East and North Africa in 2011, driven by demand from new airlines in the Middle East. This is a strong position for the sector to be in given that between 2010 and 2020 the Middle East is forecast to account for 14% of total orders for civil aviation.

Demand for exports has been a key factor in the recovery for manufacturing. The ONS will release statistics on exports for the whole of 2011 on Thursday and these are likely to show that 2011 was a strong year. We already know that total exports hit a record high back in October, with exports to emerging markets looking particularly strong.

But 2012 is likely to altogether more challenging. The Eurozone still buys roughly half of the UK's exports and other markets could also suffer from the crisis in the area. For example, the IMF has stated concerns that ongoing turmoil in the Eurozone could hit growth in China.

With this in mind we will be discussing strategies for growing exports at our conference.

We'll also be discussing the economic environment for exports all this week on the blog, and you can read our guest-piece over at the Manufacturer.

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