What are the main obstacles for West Yorkshire companies when it comes to exporting?

In November 2021, the Department for International Trade published its New Export Strategy, setting out the ‘Race to a Trillion’ ambition as part of its policy of developing the global engagement of the UK economy.

According to data released by the Office for National Statistics (ONS) in April 2023, the West Yorkshire region, with a Gross Value Added of over £60 billion in 2021, is the largest contributor to the economy of the Northern Powerhouse and the largest regional economy outside London. Although export is recognised as an essential component in economic development for the West Yorkshire region, its overall export levels are behind many UK regions.

In 2021, the West Yorkshire Combined Authority (WYCA) published its West Yorkshire International Trade Strategy 2022-2026. Delivering the strategy, however, requires a better understanding of key factors that drive the export performance of local companies.

The WYCA and other West Yorkshire councils currently do not have a coherent and consistent policy for export support programmes. There have been some targeted projects, such as the “Export Programme through Creative Catalyst”, and developing opportunities in key markets such as the US and India. However, the success of these schemes has not been systematically evaluated.

Project overview

The benefits of exporting – boosting jobs, wages, sales, productivity and innovation – are well documented. Yet increasing exports does not guarantee that the benefits will be spread throughout the region.

Members of Leeds University Business School (Professor Yingqi (Annie) Wei, Professor Frank McDonald, Dr Emma Liu and Dr Han Jin) alongside colleagues in the West Yorkshire Combined Authorities (WYCA), conducted a project to co-develop a framework that would address the issues of inequality in the region when it comes to reaping the benefits of exporting.

We conducted a survey between January and May 2023, receiving responses from over 140 companies in both manufacturing and services sectors, covering a range of firm size, in the five metropolitan areas in West Yorkshire (Bradford, Calderdale, Kirklees, Leeds, and Wakefield).

We then held a workshop in July to discuss their findings based on an analysis of secondary data and the results of the survey. The workshop was also used to facilitate roundtable discussions and gain insights from attendees (which included policymakers, practitioners, and academics). Read our second blog post for a summary of the key points made during the roundtable discussions.

Key findings from the survey

West Yorkshire companies require support to participate in trade fairs in other countries.

Participating in trade fairs in other countries is the most important reported area where West Yorkshire companies felt they needed support, followed by finding or developing export markets and receiving finance support.

More than 40% of the exporting companies surveyed recognise the opportunities brought by foreign trade fairs to advertise products to prospective customers and reinforce their international market presence.

The companies require different support depending on where they are based.

When comparing the exporting companies between Leeds and other parts of the region, the companies report different views on the areas that need support. Around half of the companies in non-Leeds areas do not consider finance an important area requiring support. Moreover, compared with the companies in Leeds, they are more likely to benefit from finding where to go for advice about exporting and learning about key cultural and language problems.

There is low motivation to export among non-exporting companies.

Among non-exporting companies, over 50% believe they can secure their major objectives without exporting. This lack of incentive is quite common among companies across all the regions in West Yorkshire. Most of these companies are micro- and small-sized, with fewer than 50 employees.

Lack of managerial expertise is one of the biggest obstacles.

One of the main obstacles identified is the lack of managerial expertise. This is more significant in other parts of the region (45%) than in Leeds (13%).

Digital technologies are used in some areas of the business more than others.

Although digital technologies are more widely used by exporters than non-exporters, this varies in companies across the region.

The survey found that companies extensively introduced digital technologies for marketing and sales activities and operations (eg inventory control, distribution, logistical systems, and management of supply chain) but the use of digital technologies in human resource management (eg recruitment, training, and compensation) are relatively less used.

Only 42% of exporters used digital technologies for compliance with export regulation and export documentation requirements. Digitalisation enables exporters to effectively manage trade documents, eliminating extensive paperwork and administrative burdens, and fastening customs clearance.

Companies record few problems associated with infrastructure and local supply chains, but report problems with employment policies and working conditions.

Companies’ constraints vary by spatial location. Leeds companies are mostly hindered by employment conditions, such as flexible working hours, working from home, policies to address discrimination based on protected characteristics, apprenticeships for young people, and training for people looking to change career.

Compared with companies in other areas, Leeds exporters are more likely to recognise the role of childcare provision, remedial education in basic skills, and support for people with disabilities to engage unemployed or economical inactive labour and thereby foster inclusive growth.

Bradford companies, by contrast, experience more obstacles in physical (eg road, rail, air and utilities) and socio-economic (eg crime, housing, and school) infrastructure. The competitiveness of firms in Calderdale and Wakefield is impeded by the underdevelopment of local supply networks.

Exporting companies have a higher level of innovation than non-exporting companies.

Over 60% of exporting companies have extensively introduced innovation in product/service and operational process in the last five years. The ratio is only 30% to 40% among non-exporting firms.

Recommendations

The findings suggest that:

• Support needs to be tailored on a sub-regional basis
• Providing information to local businesses on the benefits of export for company growth and innovation may incentivize those currently not exporting (particularly smaller companies)
• Developing managers so that they have experience of exporting (eg internships with companies that export) may enhance much-needed managerial capacity in this area
• Companies might benefit from external support on how to adopt digital technologies. (This is aligned with the UK digital strategy to support businesses through digital adoption across the country.)
• Policy towards infrastructures, local supply chains, and employment conditions may need to be tailored according to geographical location, and whether companies are exporters or non-exporters.
• Policy to enhance innovation that addresses resource issues could be helpful. (Interventions to boost innovation are closely linked to high levels of export, as well as increasing productivity.)

Read the report for further information.

This project was funded by the Research England 2022-23 Policy Support / Participatory Research Fund.