Exporting firms are cashing in on pound's slump

One Black Country manufacturer that is enjoying unprecedented growth is Alloy Wire International, a global leader in the manufacture of round, flat and profile wire.

The company, which employs 32 people at factories in Brierley Hill and Yorkshire, has seen sales rise to $4.5 million over the last 12 months compared to $1.8m in the previous year.

Tom Mander, managing director designate, commented: “There has been a big bounce back in the US following Covid-19, with many stalled Government projects now being released.

“The country is also self-sufficient when it comes to energy supply, so, with oil and gas being a big opportunity for us, we’re currently seeing a boom in orders from spring makers producing parts for this sector.

“The dollar being strong against the pound does make us more attractive to buy, but we do have to balance that with the fact that raw material we occasionally buy from America is now more expensive. It’s never just black and white.”

Alloy Wire International has responded to the rise in sales in the US by increasing stockholding of raw material to keep up with demands for larger quantities, whilst a £1m investment drive has enabled it to maintain relatively short lead times – four weeks, compared to 12 weeks with most of its competitors.

A disastrous day for the pound on Monday led to consternation among many economists and also helped Labour take its biggest poll lead over Tories for more than 20 years.

The record low of 1.0327 against the US dollar was struck after traders were spooked by the Government’s economic plans.

The collapse of the pound means people importing goods or raw material from overseas are having to pay more.

There are warnings that oil and gas, sold at wholesale in dollars, will become even more expensive. Breweries have also warned of an increased in the price of beer because hops are often imported.

Paul Hull, co-owner of Tipton’s export transportation solutions business KMB Shipping Group said that the United States was a very buoyant market for the business at the moment. One of our biggest clients has just booked 150 containers to the US start a very big order for us,” he added.

Mr Hull said that there had been rising demand for KMB’s services as the value of the pound had fallen over the course of the year. The volume of goods being shipped to the US had risen and it was now one of KMB’s biggest markets.

“The latest fall though has been a double-edged sword. The big problem has been that shipping lines quote in dollars.

“Now the rate has gone from 1.10 to the pound to 1.04 it means containers are costing a lot more.

“Customers have been shocked to find exporting costs have risen by thousands of pounds,” he explained.

Telford food processor Bridge Cheese said the current currency crisis could offer short-term export opportunities but ultimately result in increased prices at home.

The company sources a wide range of cheese and dairy ingredients from across the UK and Europe which are then used to produce a range of cheese products for customers such as restaurant chains, food manufacturers and wholesalers as well as overseas markets.

Managing director Michael Harte said the current weakness of the pound would create export opportunities for the dairy industry to secure extra short-term spot business. But that Bridge Cheese was looking to secure long-term sustainable business.

“This is key to us and this is what we are working on. UK milk volumes are down year-on-year which means that there is less raw material available against a backdrop of the UK already being a net importer of dairy products in 2021.

“Demand for dairy products including cheese has remained strong in recent years and therefore the industry is reliant on imports to meet overall demand within the UK and the weakness of the pound will mean an increase in the cost of imported products.

“Extra demand arising from new export opportunities coupled with an increase in costs of imported dairy products is in the short-term likely to lead to further pressure of increased prices for dairy products that are consumed in the UK.”

The pound’s tumble makes it more expensive to import goods and commodities, such as food, clothes, oil and gas. But a fall also makes British companies more competitive when they export around the world. A cheaper pound means that it is cheaper for people around the world to buy British goods and services.

Weakness in the pound also makes the UK an attractive place for international investment, particularly from the US.

Sterling rallied a little after a big fall on Monday, but economists have warned it could still fall to parity with the dollar this year for the first time. The Treasury has moved to settle the markets with the promise of a Budget next spring.

Anton Gunter, managing director of Telford-based freight forwarding company Global Freight Services, said whilst weakening of the pound would create financial uncertainty in the economy, it presented a huge opportunity for exporters.

He said: “Now more than ever businesses should be looking to expand their export markets and get their products out there. We have a solid track record of producing sought-after goods in the UK and weakening of the pound will means those products will now become even more attractive to overseas buyers from a price perspective.”