The ‘fear factor’ stopping firms from exporting

Yorkshire is underperforming on export performance, figures suggest, which is fuelling concerns about the future growth and prosperity of the region.

Companies are being held back by the “fear factor”, according to Neil McLean, chairman of the Leeds City Region Local Enterprise Partnership.

He said company directors have “a huge nervousness and misunderstanding perhaps” about whether they have the right products, how to access new markets, what the risks are and how those risks can be mitigated.

During the boom years, businesses performed well in domestic markets and decided they “didn’t really need to bother” trading with developing economies, he added.

Mr McLean said: “We do have a number of companies which have exported traditionally for years and years and years, but many of our businesses do not have the need or the support for international exposure.”

Goldman Sachs, the international investment bank, predicts that by 2050, the United States will be the only Western economy in the global top five.

Mr McLean said: “The growth potential in developing markets is absolutely massive whereas anybody looking at the UK and western markets would say it is flat and it is looking flat for some considerable time.

“Growth in developing markets is where the future of many businesses is going to have to be.

“That means they are going to have to change their mindset. It also means the support services are going to have to up their game massively.”

He added: “We see it as fundamental to the success of many of our businesses.”

The start of British Airways’ new service between Leeds Bradford Airport and Heathrow is “hugely important”, said Mr McLean, adding that BA and its rivals need to improve some of their onward services.

Similarly, the long-awaited high-speed train link between London and the North will help Yorkshire businesses increase international trade, he added.

A recent business survey found that just 10 per cent of businesses in Leeds and Bradford and the surrounding areas are trading internationally.

The city region might pride itself on its service sector and healthcare industries, but these are underperforming rival regions in their share of UK trade.

All this combines to a trade deficit of £1bn a year in the so-called Leeds city region. The local enterprise partnership is working with universities, industry organisations, chambers, UKTI staff, HM Revenue and Customs and UK Export Finance to solve the problem and boost international trade.

Yorkshire exports hit nearly £4bn in the third quarter of 2012, up from £3.7bn the previous quarter. The region’s exports were worth £11.7bn in the first three quarters of recession-hit 2012, versus a total of £16.1bn in 2011.

Strongest sectors are mineral fuels, chemicals, manufactured goods and machinery and transport. Just over half of Yorkshire’s exports go to the European Union. Yorkshire’s second biggest export partner is North America, accounting for £658m in the third quarter, followed by Asia and Oceania with £493m.

Tom Vosa, economist at Yorkshire Bank, said the region does not trade enough with the United States and Asia. Nor does it have a large car manufacturing centre like the Midlands or the North East so has been unable to benefit from the global resurgence of the UK automotive sector, added Mr Vosa.

Mark Robson, regional director at UK Trade and Investment, said: “The marketplace is alive with opportunity, not least in Eastern Europe, South America and South East Asia, and we have the skills, products, services and expertise as a region to do a great deal more and fulfil our potential.”

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