The German automotive industry has a well-deserved reputation for productivity and reliability, so it is a hugely positive sign for UK industry when a small British company is able to successfully set up a factory there.Midlands based Automotive Insulations has done just that. In fact, the company, who manufacture thermal and acoustic insulation materials for vehicle parts, has had its most successful few years ever. This has enabled the expansion into overseas markets. After a period of recession defying rapid growth, we were looking to end our dependence on one market/customer. Having identified an over exposure in the UK automotive market, we realised the massive potential for repeating our core business in various European markets, particularly Germany. The German factory is the company’s second overseas site with the first one set up in Sweden at the end of 2012.
Learning lessons from experienceI have learned some valuable lessons from setting up factories in diverse European markets, not least the importance of having the right local partner. In both Sweden and Germany, we chose to work with organisations that had been known to us for several years prior to setting up joint operations. Having a local partner has enabled us to learn about the culture and provided us with a wide and well established network in the area. A partner’s existing knowledge can also help ensure compliance with local laws and as facilitate access to any available support and grants. The foray into overseas markets has been directly instrumental in the company’s rapid growth over the past two years. Setting up abroad has enabled us to grow our company in a way that we would have struggled to achieve by focusing solely on the domestic market. We found that our products would sell if we were actually in place in the local market with a manufacturing and warehouse base.
Opening up new marketsSweden now supports the UK sites by taking on work that the company had previously placed with a German supplier. The newly opened German site is currently manufacturing materials for car production in Germany and for Automotive Insulations’ UK headquarters in Rugby as well as producing materials for the construction and specialist vehicle markets. This will enable us to develop a forward looking European-wide sales strategy at the same time as expanding our product range into new non-automotive sectors.
Tips for successHaving been through the process twice, here is some valuable advice for other companies considering setting up overseas.
- Ensure that the day to day running of your UK business is sound;
- Write a realistic business plan which will help you access the finance that you need;
- Be well prepared and carry out a proper risk analysis with your team. You don’t need to have all the answers – but having identified potential problems will help you deal with any issues that do arise; and
- Get a reliable local partner who has access to good local networks and who can help ensure compliance with local laws. In Germany, our partners put us in touch with local inward invest teams who assisted in finding everything from property through to people and licences – in fact, almost everything needed to start a business. And best of all, it was free.
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