Covid-19 case study: Coltraco Ultrasonics reconfigures strategies, sources UK alternatives

BExA member Coltraco Ultrasonics is a high-exporting manufacturer that exports 89% of its output to 120 countries. Carl Stephen Patrick Hunter OBE, the company’s chairman and BExA Council member, provides an overview of how it is weathering the Covid-19 storm.

During the early days of Covid-19 in March 2020, we lost 95% of a primary market sector and 50% of another. In the first month we saw our EU and Asian markets in rapid decline. Second-tier supply chain issues and, in the early days, concerns around freight services, meant that we had to focus on these primary vulnerabilities. We had to be quick to consider what we centred on in production terms to build our stock; how to establish safe and remote-working to maintain the business overall; what we did with our research and development programme; and how to reconfigure our export and operating strategies.

Our first concern was our staff, their well-being, and the recognition that it is they who are the sum of the company.

Therefore, on 11 March 2020, we guaranteed the full salaries of staff and have not had to move any to furlough since. In R&D we immediately slimmed the 24-month programme from nine projects to three, resourced and advanced them. Indeed I am proud to say that we launched a new product in one of them this week, have the first pre-production models of the second readying for next week and the third will be at working prototype stage by July 2020.

In April we saw the USA market falter very quickly. Nevertheless, our export strategy since mid-March was one of ‘forward positioning’ the company overall. This meant that we focused sales, marketing and distribution efforts on:

  • Maintaining our remaining primary sectors
  • Making hitherto secondary market sectors into ‘primary’ market sectors
  • Populating the Global Distribution Network (GDN) across all market sectors, with a clear strategic understanding that it would become a robust post-Covid-19 one.

We did this by moving some sales functions into marketing, and extended marketing responsibilities to some sales personnel relating specifically to GDN work. We established a weekly all-company 30-60 minute video conference call and a company policy email two to three times a week.

The importance of reshoring

As Covid-19 developed in Asia, and before it hit the UK, secondary component supply chain issues had emerged amongst our second-tier suppliers. We had to rush to source UK alternatives. By 11 March 2020 it was clear that had we not done this, our own production ability may have been placed under severe strain and with the risk of cessation.

Thus it was those parts of secondary supply chain risk, furthest away from us, that gave us four weeks to react before Covid-19 hit the UK. UK exporters who are supply-exposed in China will have been placed under severe risk. To me, it should signal just how much harder HMG’s work will be in “levelling-up” if it does not incentivise UK companies to reshore manufacturing and enable higher value economic opportunity to those in the bottom 20% of UK society who merit it most. When I began in business nearly 30 years ago, for instance, there were 168 manufacturers of a particular type of electronics. Today there are only 34 left. This damage is almost-entirely due to offshoring to China.

We ceased any thought of moving elements of our own manufacturing to China five years ago having experienced intellectual property infringement. We secured the services of a Chinese lawyer through the kind support of British Embassy Beijing. Three and a half years ago we brought four IP infringement cases to the Beijing Courts. We won two and lost two after 24 months. We went to Appeal on the latter and last year won both. To their credit we saw no corruption in the Beijing Courts. Our conclusion was that we would not consider manufacturing anything there, no matter how minor. Had we done so it is clear that we would have lost production capability and the employment of UK nationals. I am very pleased we did not.

Supporting UK Government

During Covid-19 I have divided my time: 80% company and 20% public service, maintaining contact with ministers and civil servants to offer support to the Government’s economic measures within areas of our subject matter expertise. This included Covid-19 economic recovery advice from the SME, exporting and Government-business perspectives, and this work is ongoing. We made clear that HMRC’s PAYE Deferral Scheme was flexible, quick to implement and that we see it as an example of “perfect policy”. I applaud the “can do” spirit by ministers and civil servants alike, and encourage BExA members to see beyond the media reporting of them both.

I warmly support both free trade agreement (FTA) sequencing and the Secretary of State and the Permanent Secretary at the Department for International Trade as the exceptional Export Strategy of 2018 is refreshed, and see exporting and the work of the Department for International Development’s Business Integrity Initiative as cornerstones of the UK’s post-crisis economic recovery. In the USA there are “many hundreds of Americas” that UK exporters rarely see, but will through a UK-US FTA. Asia may constitute 50% of global GDP by 2030; joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will enable friction-free UK-Japan and UK-Australia/New Zealand FTAs.

We warmly support the fine leadership of Geoffrey, Marcus and Michelle at the British Exporters Association and see an enhanced role for BExA as our country rediscovers the national imperative of increased exporting. We see no reason why the UK should not be in the top half of G7 exporting countries and look forward to this occurring by 2023.

About the author:

Carl Stephen Patrick Hunter is a Chairman and former British Army Greenjacket Officer who works to advance professionalism, performance and integrity in international business and public life. Coltraco Ultrasonics is world-leading UK designer and manufacturer in its field and exporter of its maritime and safety engineering technology to 120 countries. In early 2019 the company won the Queen’s Award for Enterprise in International Trade and later in 2019 Carl won the Lifetime Exporting Achievement Award at Mansion House. Carl offers a unique global perspective gained from over 30 years of leadership, advisory work and international trade. He is a Fellow of the Institute of Marine Engineering, Science & Technology, a Trustee of the Royal Institution of Naval Architects a Freeman of the Honourable Company of Master Mariners and a Liveryman of the Worshipful Company of Scientific Instrument Makers.

Carl delivers strategic counsel and mentoring to leaders in Government, Parliament, and the UK business community, serving as an Export Champion for the Department for International Trade (DIT) and as Head of Government Relations at the British Exporters Association. He has also helped develop UK & ISO Standards in the maritime and safety engineering sectors, is an Expert Panel Member of the Business Integrity Initiative at the Department for International Development (DFID) and of the Expert Trade Advisory Group (SMEs) at DIT, has worked with the Department for Transport and the International Maritime Organisation on UK values, Maritime Safety and the Eradication of Modern Slavery at Sea, was a stakeholder to the Department for Transport’s (DfT) Maritime 2050: Navigating the Future 30-year maritime strategy and DIT’s Export Strategy. Carl is a Decision-Making Panel Member of the Bank of England and the 37th Commonwealth Business Mentor. He is the Diocesan Governor for St George’s CE Primary School Hanover Square. Carl was awarded his OBE for Services to Business and International Trade in HM The Queen’s Birthday Honours in June 2019. He holds an Honorary Doctorate of Science of Durham University and is Professor-in-Practice at Durham Business School. He has four children with Dorothy, his wife of 28 years, and lives in London and Somerset.

Posted 22/05/2020