Coming to America - tips for exporting to the US

Coming to America - tips for exporting to the US

17th July 2019

The US is the most important nation the UK trades with, in terms of value of exports, and with such a huge potential market, many manufacturing companies are now looking to do business with companies across the Atlantic.

Exports to the US were worth £100 billion in 2016, more than twice as much as exports to any other country, according to the Office for National Statistics (ONS). In contrast, the UK only imported £66 billion worth of goods from the US in 2016.

This is a growing trend. From 2011 to 2016, exports from the UK to the US grew by 26%. In contrast, over the same time UK exports to the European Union fell slightly.

The top exports from the UK to the US are cars – worth £7.4 billion – followed by pharmaceutical and medicinal, which is worth £6.6 billion, mechanical power generators (£3.9 billion), works of art (£2.7 billion) and refined oil (£2.6 billion), again according to the ONS.

UK companies also like to invest in US companies. The UK is the biggest contributor of foreign direct investment into the US, according to the US Bureau of Economy Analysis.

Among Made in Group members, the US is the third most popular place to export goods and services to, behind only France and Germany, according to the 2018 Made In Survey.

Selling in the US

With its own huge manufacturing and engineering sectors, the US provides plenty of potential opportunities for UK businesses to sell products into.

However, UK businesses must tread carefully when planning to enter the US market. US commercial standards are different to those in the UK and products and company procedures will have to be tailored to ensure that they comply.

One important thing to note is that the US is not a single national market; it is a federal system. This means that each state has to be treated as a separate entity with its own procedures. As a result, any potential exporter must be aware of each state’s specific rules and the implications for the business and whether it is possible to do business in that state.

Exporters should also be aware that the US imposes tariffs on some products, which are designed to make US-made goods more competitive against imports.

The Department for International Trade (DIT) recommends establishing a US subsidiary or trading company for a long-term commitment to the US market, as this gives greater control over the products and brand. However, there are additional set-up costs involved in this option.

There are other options for developing a presence in the US, according to the DIT. This includes acquiring a US-based company in the same market sector, which gives instant presence in the market. An office can be established with staff from the UK – although that will mean securing visas for those staff who are moving. Or, you can pay a marketing consulting firm, contract sales force or marketing organisation to find sales leads and feed them back to the company in the UK.

But whatever you do as an exporter, seek legal guidance before entering into any agreement – ideally from lawyers with knowledge of US and UK law.

Making associations

Boneham & Turner, a manufacturer and supplier of tooling components and precision engineered components based in Sutton-in-Ashfield, has been exporting products to the US since the early 1970s and exports now make up about 40% of the company’s turnover. The company has a long-established subsidiary in New Jersey – comprising a sales office, warehouse and small manufacturing capability – as well as a network of independent sales reps around the country.

Charles Boneham, managing director of Boneham & Turner, says that in the US the company sells to distributors rather than direct to end users, due to the geographical size of the market.

He maintains close contact with the US office, putting in a call to them most days to check what is happening, what their targets are and any issues they may have.

He emphasizes the importance of getting the right team in place in a subsidiary – something Boneham & Turner have done.

Charles adds that being a member of a US trade association is important for UK companies looking to export successfully. He recommended the Industrial Supply Association (ISA), which has an annual four-day conference. “At the conference, manufacturers like myself meet up with distributors and sales reps from around the country and it is great for networking and making some really good contacts.

“For anyone thinking of selling engineering products in America, it is a must, I would say,” Charles added. “I would recommend that show to anyone if you want to get well connected in America; you need to get stuck in and get to know people.

“In America there are fantastic opportunities out there and it is a really big market, but it is very competitive,” warned Charles.

With a new trade deal apparently in the offing for the UK, according to President Donald Trump, then the opportunities for UK businesses could get even greater in the coming years.

For more information and advice on exporting to the US, go to www.gov.uk/guidance/exporting-to-the-usa

Charles Boneham is also happy to talk to Made in the Midlands members who are considering exporting to the US and would like advice on how to go about it.

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