Memorandum submitted by the British Marine
Federation
1.1 The British Marine Federation is the
trade association for the leisure boating industry, representing
around 1,500 member companies. Our members provide the boats,
equipment, facilities and services that enable nearly four million
people to enjoy their recreation afloat on the coast and inland
waterways of our country. The BMF also operates the London and
Southampton International Boat Shows via its subsidiary National
Boat Shows Ltd.
1.2 Our industry is wholly comprised of
small and medium-sized enterprises with over 95% of companies
within our membership employing less than 50 people (based
on BMF membership statistics). In total the UK leisure marine
sector directly employs over 35,000 people and generates
annual revenues of over £3 billion, of which 35% represents
export sales. Over recent years the leisure marine sector has
been recognised by Government as a manufacturing success story
and a growing and valuable contributor to the UK economy.
1.3 Our industry's export performance is
built on the reputation for good design, quality and innovation
of UK manufactured boats and marine equipment. Some of our leading
boat builders export in excess of 90% of their output. The BMF
enjoys a partnership relationship with UKTI in support of the
UK marine export effort.
1.4 The BMF welcomes the opportunity
to submit evidence to the select committee at a time when many
member companies are facing financial difficulties, including
access to credit from lenders and other financial institutions.
2.0 MIDDLE EASTERN
TRADE IN
THE AREA
OF DISCRETIONARY
SPEND—FOCUS
ON DUBAI.
2.1 There is a general perception that trade
with the Middle East poses an extraordinary opportunity for UK
industry to export itself out of recession. The committee itself
quotes a trade increase of 23% over the first 11 months of
2008, to £11.4 billion to Arab states. The BMF, in cooperation
with UKTI, has supported its members in order to attend the Dubai
Boat Show. This event has been, up until recently, growing in
popularity by over 10% year on year and has been rightly identified
by the leisure marine industry as a potential area for growth.
2.2 However, it is not the case that foreign
trade with this region is immune from the effects of the global
recession. Indeed, this view certainly does not correspond with
the recent experience of our industry. This year's Dubai Boat
Show saw a marked decrease in attendance, and orders throughout
the sector have dropped by a higher than average level
from the Middle-East region.
2.3 The BMF would encourage the committee
to consider that, while many Middle Eastern states continue to
invest in infrastructure projects using the cash reserves derived
from their oil wealth, expatriates of every nationality, many
of whom work in the financial sector, make up a significant portion
of those receiving the products of UK trade. Dubai is an excellent
example of this. With 3.62 million expatriates living in
Dubai alone, 62% of homes in the country are owned by foreign
nationals. However, the average property has fallen in value by
an alarming 60% in the last year. There has also been a 25% decline
in demand for luxury goods in the country over the same period.[17]
2.4 Furthermore, 60% of residential developments
in the UAE have been cancelled this year, many of which incorporated
marinas, further reducing the potential of future sales for our
sector in this region.
2.5 With the economic downturn affecting
marine businesses particularly badly, it is crucial that UKTI
continues to support leisure marine companies with sufficient
and appropriate funding to access the right foreign markets for
their particular products.
2.6 With this in mind, the BMF would encourage
the Committee, as well as UKTI, to carefully consider how it can
best support British industry by furnishing itself with detailed
and up-to-date market intelligence. At this stage, while Dubai
still offers opportunities for trade, the UK leisure marine industry
is taking a holistic approach to exporting to the Middle East.
To that end, we are currently examining the possibility of taking
our members to the Abu Dhabi boat show in order to diversify the
available markets in the region and create an increasingly stable
and sustainable market for the industry.
3.0 OPPORTUNITIES
FOR TRADE
IN THE
MIDDLE EAST—UKTI
FUNDING
3.1 The BMF has enjoyed a very productive
relationship with UKTI which has helped the leisure marine industry
to access the Middle East market. The Tradeshow Access Programme
has been particularly helpful to our members, supplying them with
funds of up to £1000 for those inexperienced working
abroad. Our members are also users of the Overseas Market Information
Service and the Market Visit Support Scheme.
3.2 Despite these schemes, the level of
funding received by marine businesses remains low. With only £1,000 available
to fund a foreign trade visit, many SMEs continue to believe that
such markets are beyond their reach. This situation is compounded
by the volume of administration required to secure a relatively
nominal level of support, as well as significant lead times. The
BMF believes that red tape should be cut so that accessing this
funding is made as simple as possible, particularly for SMEs.
We also would like to see an increase in the level of funding
available though the Tradeshow Access Programme.
3.3 Furthermore, we would advocate that
a significant reduction in fees for the Overseas Market Information
Service be introduced in recognition of the difficult financial
climate. This service, up until recently, was free for members
and could be again should HM Treasury supply UKTI with the appropriate
funding, if even on a temporary basis. This will ensure that businesses
retain and expand their access to useful market intelligence and
enable the UK to adapt to changing international market trends,
despite the difficult economic situation.
3.4 The marine industry recently lost Priority
Status within UKTI and we believe this has led to a reduced status
within the agency. Given the industry's exposure to a depressed
credit market, the resources of our members to engage in overseas
activities are at their lowest in many years, despite there being
a demonstrably high regard and demand for their products in various
foreign markets.
3.5 The BMF calls upon UKTI to recognise
the considerable economic benefit and prestige the leisure marine
industry brings to the UK by reinstating it as a priority sector.
This change is of particular urgency and importance to our members,
given the recent announcements within the budget promising much
needed additional funding to support key export sectors.
4.0 OPPORTUNITIES
FOR TRADE
OUTSIDE OF
THE MIDDLE
EAST
4.1 While the global economic situation
has been extremely detrimental to the prosperity of the UK Marine
Industry and SME's in general, the depressed pound does present
opportunities for UK businesses to hold a competitive edge in
exports in certain sectors. This is particularly true within the
euro zone, where access to the single market but independence
from the Euro makes the UK an attractive proposition for buyers
located in continental Europe. This is born out in reality by
extensive anecdotal reports across the sector demonstrating European
orders propping up otherwise depressed order books.
4.2 UKTI must recognise this opportunity
and provide support to trade in Europe, as such a specific focus
has the potential to help arrest falls in UK exported goods, against
the broader market trends. While the whole European market is
contracting, there is an opportunity to secure a greater share
for the UK which will leave British businesses in a prime position
when the upturn comes.
5.0 SUPPORTING
OUR LEADING
BOATBUILDERS AND
THEIR EXPORT
ACTIVITIES
5.1 The UK's leading boatbuilders already
contribute in excess of £1 billion to the nation's economy,
with a vast amount of that revenue derived from foreign buyers.
Despite this, the UK's favourable market share in this area is
under threat in the current economic conditions. Every effort
must be made in Government to ensure that these iconic, recognisably
British brands are given the opportunity to successfully compete
and market their product overseas.
One way that this could be achieved is to implement
a VAT offsetting scheme based on those already introduced by other
European countries, where an increase in capital expenditure yields
greater tax relief for the buyer.
5.2 Additional support could also be found
via a supplement to the existing Tradeshow Access Programme. The
cost, particularly for larger boat builders, to exhibit across
the globe is extremely high but is necessary in order to retain
a critical mass of foreign orders. If the Government were to provide
a percentage contribution towards their stand costs, this would
serve as an excellent incentive to retain and even expand export
activities, as well as help to realise the Government's ambition
for an export lead recovery out of recession.
6.0 EFFICIENCY
OF UKTI INTERNAL
PROCESSES
6.1 The BMF adds its voice to other trade
bodies calling for the devolution of funds from UKTI to their
direct control. While many of the UKTI initiatives require significant
time to process, the fluid state of the economy requires a rapid
response to take advantage of lucrative but fleeting opportunities.
The BMF, with its expert knowledge of the sector, could act as
a fully audited agent on behalf of UKTI, to ensure its funds deliver
the best possible value for money for the tax payer while yielding
the maximum possible benefit for the UK economy.
6.2 We would be delighted to discuss such
proposals in further detail should the committee wish.
7.0 CONCLUSIONS
7.1 The BMF commends the committee's focus
on the importance of supporting exporting businesses and their
role in correcting the current economic recession. It also recognises
the opportunities available in the Middle East to help achieve
this.
7.2 However, the BMF reiterates that, while
public infrastructure investment may continue unabated in the
region, many other industry areas are experiencing a larger than
market average decrease in trade in this area, as a result
of the economic conditions alluded to in the aforementioned evidence.
7.3 The BMF would encourage the UKTI to
consider these conditions when implementing its strategy in the
Middle East and calls for a holistic approach to trade, taking
into account all industry sectors, including leisure marine.
7.4 We would also request that the committee
consider the benefits of creating a new priority market within
UKTI that includes leisure marine, and the potential for increased
trade and prosperity for our members.
7.5 Additionally, we encourage HM Treasury
to recognise the importance of UKTI in securing the economic future
of the leisure marine industry, and to increase its funding to
provide access to new markets for as many marine businesses as
possible.
7.6 Finally, We would encourage UKTI to
work hard on identifying areas where efficiency savings can be
found and to pass on these savings to exporting businesses.
8.0 NEXT STEPS
8.1 The BMF would be delighted to provide
any further evidence to committee, should you require it, and
is also available for oral evidence. We look forward to further
involvement in your inquiry.
16 April 2009
17 Figures sourced from www.arabianbusiness.com and
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