Glasgow-based John McGavigan Ltd is a real success story for Scottish manufacturing. With operations in Scotland and China, it supplies automotive and industrial components to some of the world's largest brands. BQ caught up with director Steve Mathers ahead of the HSBC Scottish Export Awards 2016 to hear more about the company's success.
What does your company do?
McGavigan is a manufacturer for a range of technical and decorative plastic components and assemblies for the global automotive industry. We supply many of the global car brands around the world from our manufacturing operations in Scotland and China.
How long has the company been exporting?
The company has exported product for more than 30 years, though the geographic scope has expanded as our client spread has grown.
Most of our customers are established global brands with manufacturing and assembly interests in each of the major economies, so in many ways our clients have encouraged us to grow internationally too.
What do you currently export, and where to?
Today we export close to 90% of our group product into locations as wide as Asia, the Americas and more locally within Europe.
These range from printed components you would see in the vehicle instrument cluster, interior plastic trim you may find in the door panel and complete decorative plastic button and switch assembly units you would typically use when you control the temperature in your car or are changing the channel on the radio.
What motivated you to start selling overseas, and how long did it take?
A major driver has always been to support our global clients, and as they have growth, so to have we.
Often we will be specified on a new vehicle model which will be manufactured in a variety of locations, so as part of our challenge it is down to us to manufacture the product needed at the right cost and to deliver it to the client when they need it.
In most cases where we are entering new markets we allow a year to plan the process of shipping and local management of the product into the region.
What is the easiest part of exporting?
A difficult question to answer as exporting and its associated challenges are often governed by the region or country you plan to export into.
In a majority of cases our export channels are well defined because they are often well trodden routes, so legislative and taxation matters are usually well defined or are in some instances supported by our clients’ local operation.
Geographically the process of exporting within the EC is by far the simplest both in terms of export controls and tax considerations.
And the most challenging part?
Once again it is difficult to generalise because each region offers its own challenges. Entering markets in Asia, and I would highlight China as an example takes a little adjustment to understand the local customs and taxation regulations so its important to have a local partner to help guide you through the processes. The same can be said for South American regions where import tariffs can be challenging.
Have language barriers, currency changes, etiquette and culture ever caused you any difficulties? How did you overcome them?
To sell effectively within any region, whether inside Europe or further afield, cultural sensitivity and an appreciation of local business protocol is essential. What may fit for one market may easily not work in another.
Our formula has always been to establish local representation in each market to assist with any language issues, and to guide us through the cultural and professional expectations we need to respect.
Did you get any support when you wanted to trade abroad? Who from, and was it helpful?
We have been fortunate that our experience has grown over many years, and in doing so our confidence to operate within international markets is high.
Having said that we do work closely with SE and especially Scottish Development International as we seek to extend our global presence, and the early phase advice and support has been invaluable especially in China and more recently Japan.
We are currently exploring activities across NAFTA regions where this regional knowledge is often very valuable.
Of recent times we are also working a little with the Global Scot network, allowing us to tap into an experienced network of international business contacts able to offer practical advice on matter which otherwise can be daunting to the newcomer.
What advice would you give to someone just starting to explore overseas markets?
Don’t try to do too much too quickly. The risk of rushing into a “go global” strategy is you can “overtrade” or in other words, you spread yourself too thin and it all end up as a bit of a failure.
The better approach in our experience is to pick one (or perhaps two) markets, tap into the SE network or regional offices to assist in carrying out some local market research (and find out of your product has an attraction to these market), invest a little time in researching the local cultures, and once you’ve created your own business plan, get out there and have a go.
If you succeed you’ll have the confidence to do it again, and if it doesn’t work the first time, you’ll learn what to do better next time.
In a word, no. Without strong export channels our business would not exist as we rely on working with internationally based clients.
Where next? What markets are you looking into and where do you see the company in 5 years time?
One of the interesting things about the business world is that it never stays still. We took the decision 5 years ago to extend our business into the growing Chinese automotive market which has proven very successful.
From here we have recently extended into the Japanese market where we use our regional presence to help secure further growth. Europe has had its challenges but is on its road back to recovery, and we see this very much as our “home turf”.
The opportunities ahead are to extend further in Asia, and to develop further our presence in the emerging regions in North America. These are where we are focussing on over the coming 3-5 years.
Exporting and international trade remain high on the Scottish Government’s economic growth agenda and the HSBC Scottish Export Awards are about recognising the excellence in those emerging, wealth creating companies that are selling their products, services and expertise in scores of overseas markets.