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Snapshot of Greater Birmingham's export market

Greater Birmingham Chambers of Commerce

The Quarterly International Trade Index assesses the strength of Greater Birmingham’s export market.

The report analyses official government trade data, volumes of trade documentation and survey data from the Greater Birmingham Chambers of Commerce's (GBCC) Quarterly Business Report to provide rich insight into the region’s international reach.

This first mini report will offer a snapshot of the region’s export trends over the previous six months – focusing on Q4 2018 (covering the period running from October to December 2018) and Q1 2019 (covering the period between January and March 2019).

Key Findings

  • The total value of exports for the West Midlands region fell between Q4 2018 and Q1 2019

  • Out of the seven metropolitan districts which form the West Midlands Combined Authority (WMCA), Solihull accounted for the biggest share of WMCA level exports to the European Union in 2017

  • The total number of trade documents processed by the GBCC International Hub saw a minor fall in Q1 2019 compared to the previous quarter

  • Exporters across the region are increasingly concerned about the impact of fluctuating exchange rates and increasing levels of domestic and international competition on their business output

Regional Export Data – Official Government Statistics

This section examines the latest Export data made available by HM Treasury on a region wide basis (up to Q1 2019) and on a Combined Authority basis (please note, the latest available data we have on a CA level covers 2017 and was published in November 2018).

  2018 Q4 2019 Q1
0 Food and Live Animals            188            176
1 Beverages and Tobacco               19               20
2 Crude Materials            201            191
3 Mineral Fuels            133               43
4 Animal and Vegetable Oils               12                 8
5 Chemicals            426            428
6 Manufactured Goods            836            855
7 Machinery and Transport         5,812         5,555
8 Miscellaneous Manufactures            762            721
9 Other commodities nes               20               19
          8,408         8,016

Table 1: West Midlands’ Export by SITC Code- Q4 2018/Q1 2019 (Source HM Treasury)                                                   

  2018 Q4 2019 Q1
Asia & Oceania         1,534            967
Eastern Europe (excl EU)            162            183
European Union         3,860         4,068
Latin America and Caribbean            118            104
Middle East and North Africa (excl EU)            382            373
North America         1,948         1,950
Sub-Saharan Africa            118               98
Western Europe (excl. EU)            287            273
Undefined Country Group                -                  -  
Total Exports         8,408         8,016

Table 2: West Midlands’ Exports by Country Group - Q4 2018/Q1 2019 (Source HM Treasury)

 

(i)West Midlands Exports by SITC Code & Country Group – Q4 2018

According to official statistics from HM Treasury, the total value of exports from the West Midlands in Q4 2018 amounted to just over £8.4bn (see Table 1).

The primary destination for these goods was the European Union with just under 50% (£3.9bn) distributed to EU countries. 23% of exports were sent to North America and 18% sent to Asia & Oceania.

Only 2.8% of the region’s exports were delivered to Latin America & the Caribbean and Sub-Sahara Africa, once again demonstrating the room for growth in these developing markets (see Table 2).

Transport and Machinery products remain the strong point for the region, with 69% of total exports from this sector (£5.8bn) and a fraction under 10% related to ‘manufactured goods’ (£836m).

(i)West Midlands Exports by SITC Code & Country Group – Q1 2019

Total export levels saw a minor fall in Q1 2019 – down by £392m compared to the previous quarter – a drop of 8%. Much of this was predicated on a £257m fall in machinery & transport exports.

It was a trend replicated amongst continental trade flows.

The flow of exports to Asia & Oceania fell by £567m between the two quarters – a fall of 36% and perhaps reflective of the slowdown in demand in Chinese markets.

Exports to the European Union went up by £208m whereas export flows to North America remained broadly similar between the two quarters (a rise of £2m to £1.95bn).[i]

(iii)WMCA Level Breakdown of West Midlands Export Activity with the European Union - 2017

In November 2018, HM Treasury also published a detailed breakdown of export trends focussing on Combined Authority level activity for 2017.

In total, 6537 businesses across the WMCA geography engaged in export activity with the European Union, with the total value of exports amounting to £6.7bn.

Unsurprisingly, the majority of firms trading overseas were based in Birmingham (33%) with the lowest number based in Wolverhampton (9.1%).

Firms based in Solihull (with Jaguar Land Rover’s output particularly prevalent) accounted for the biggest share of the proportion of WMCA exports (just over £2bn which amounts to 30% of the total share) and Dudley accounted for the lowest share (just over £320m or 4.8% of the total amount)[ii].

Greater Birmingham Chambers of Commerce – Trade Documentation Analysis

The GBCC’s International Hub has been assisting exporters for over 50 years in expanding their international reach and issuing a wide range of documents required in order to trade overseas.

In Q4 2018, 4898 documents were issued in total covering a range of certificates including ATA Carnets, Certificates of Origin, Letters of credit service and EUR 1 and ATR documents.

The total number of businesses which used this service in the region was 338 and these documents were issued to 103 countries across the globe.

In terms of the main destinations, 14% were sent to the United Arab Emirates, 12% went to Turkey and 9% were issued to Saudi Arabia.

It should also be noted that documentation is not required for trade with businesses based in the European Union.

The total number of documents issued in Q1 2019 fell by of 3% to 4,739 however we did see an 6% increase in the number of businesses using documentation services (up from 338 to 357).

36% of the documents were issued in January and demand fell slightly in February and March (perhaps reflective of business concerns over the potential of no deal Brexit).

There was also a 6% uplift in the total number of countries in which the documents were sent.

The majority of documents were issued to Turkey (17%), United Arab Emirates (14%) and 9% were issued to Qatar.

Only 7 documents processed were sent to the USA, perhaps reflective of the less regulated documentation frameworks which are in place as compared to the Middle East.

Greater Birmingham Chambers of Commerce – Survey Data

The latest survey data from the Q2 Quarterly Business Report revealed that 25% of service firms reported an increase export sales in the current quarter – an increase of 4%.

By contrast, over half of the manufacturers surveyed that engage in international activity recorded an increase in export sales (an increase of 5% compared to Q1’s figure of 49%).

Despite the testing economic circumstances, 58% of exporters in both sectors combined attempted to hire staff over the previous three months, and of those, 65% found it challenging to add to their workforce.

Across the board, exporters were increasingly concerned about the impact of fluctuating exchange rates on their output (39%) and increased competition both home and abroad (37%).

Businesses in both sectors also cited increasing apprehension over the impact of inflation (14%) on their business activity, perhaps a reflection on the fallout created by the depreciation of sterling since the EU referendum.

The majority of exporters expect their prices to remain constant compared to the previous quarter (71% in total).

Nevertheless, of those exporters facing pressure to raise prices, many named raw material prices (27%) and pay settlements (23%) as the primary drivers behind the price pressures they were experiencing.

In addition, 24% of exporters cited Brexit as their principle business concern.

Summary

Greater Birmingham’s export market remains robust despite the testing circumstances that local businesses find themselves operating in.

Although we witnessed a minor fall in total export levels across  the region as a whole, it was concerning to see the drop in the rate of goods sent to Asia & Oceania as the threat of a trade war between the US and China continues to affect trade flows across the globe.

Levels of export documentation have followed similar patterns over the previous six months and it was reassuring to see that over half of the manufacturing exporters surveyed saw an increase in international sales over the course of quarter two.

Of those firms looking to expand their international capacity, the GBCC International Hub is on hand to offer clear and practical advice on how local firms can approach what often seems a daunting task.

In particular, the International Hub is running a series of courses on International Trade Opportunities and Procedures (ITOPS) which covers the main elements of export administration – full details can be found on our website.

[i] HM Revenue & Customs – Published March 2019 https://www.uktradeinfo.com/Statistics/RTS/Pages/Analysis.aspx

[ii] HM Revenue & Customs – Published November 2018 https://www.uktradeinfo.com/Statistics/RTS/Pages/Analysis.aspx