EXPORTING TO THE U.S.A.

By GEORGE PENDLE

IIS Majesty's Minister (Commercial) at Washington reported

a few days ago: " The United States can produce enough in four hours' work to pay for everything they import from Britain in a year. Yet British exports to the United States are not catching up with the potential." This is a remarkable state of affairs, and, naturally, our statesmen and economists consider it quite unwarranted and most distressing. We must make a much bigger effort to catch up with that " potential."

The clothing trades are habitually referred to as the " spearhead," the " sheet anchor" and so on of the British export drive in the U.S.A. When the experts chide, advise and exhort British exporters, they are addressing all of us in general ; but we can assume that they have specially in mind those of us who are engaged in the making and merchanting of textiles and clothing. The threefold theme of all the speeches and all the writings is that our manufacturers and -merchants really must study more carefully what it is that the Americans want ; that they must fix prices that the Americans will be willing to pay ; and that they must pack their goods in a manner that will appeal to the American public. When these three require- ments have been fulfilled, Britain will at last (in the words of the Economic Co-operation Administrator, Mr. Hoffman) " begin to tap the huge reservoir of American buying power," a mere one per cent. of which will be sufficient to close the dollar gap.

The implication always is that British exporters are insufficiently acquainted with the U.S. market, and that, if they knew it more intimately, they would grow more enthusiastic about it and serve it better. It is true, of course, that many British manufacturers and merchants have a lot to learn concerning the U.S. market ; and it is most desirable that they should learn as much as possible as quickly as they can. It is -also true, however, that many British business- men have known the market very well indeed for very many years and are constantly in touch with it now. The paradox (which is usually hidden from politicians and economists) is that familiarity with the U.S. market does not necessarily breed confidence. The more the exporter knows about that market, the more it is apt to frighten him. The more carefully he studies U.S. requirements, the more scared he becomes of catering for them.

Let us take an example from the textile industry. An experienced British manufacturer of worsted " suitings " is well aware of present trends in American fashion. He knows exactly what types of colours and designs the dandies of New York, Chicago and San Francisco (yes, and there arc other towns too I) are expected to wish to wear next summer. He may have received substantial advance orders from U.S. importers for those very goods. He has probably decided to dye and spin the necessary yarn, and to weave and " finish " the required number of pieces ; but if he has committed himself to that extent, he will certainly be keeping his fingers crossed. Past experience has taught him that he is taking a very considerable risk. When the time for shipment arrives, early next year, will the U.S. importers still be willing to receive the goods that have been specially manufactured for them ? Or will they reject them, under the impact of a new " recession," or because a real " slump " has been forecast, or because local textile manufacturers have meanwhile flooded the market with goods of similar design and colour in inferior and slightly cheaper qualities ?

There are two ways in which the manufacturer in the U.K. may try to safeguard himself against being left with unsaleable " suitings " which have been specially made for the U.S.A. Firstly, he may decide not to manufacture the " extreme " colours and designs which his American customers expect of him, but confine himself to producing discreet " standard " patterns and shades, which, in the event of cancellations by U.S. importers, will be acceptable in other overseas markets where light-weight suits are worn. If he adopts this policy, however, he will be informed that he is ignorant of American taste, and that the American male only wants " novelties," and will not pay high prices for " standard " materials, no matter how luxurious their quality may be. And so the manufacturer, if he persists in this policy, will lose his U.S. clientele.

The second way of guarding against the piling up of repudiated and unexportable stocks at home is for the British manufacturer or merchant to establish a warehouse or shop of his own in New York to which he will consign his goods, for sale on the spot. In this manner he can at least be sure that goods which have been designed and made for the U.S.A. shall actually reach that market. Several imaginative and courageous British firms, with long experi- ence of local conditions, have adopted this method. The holding of stocks in the U.S.A., however, is a risky and expensive practice. In bad times, unsold goods (on which freight and Customs Duty have been paid by the exporter) will accumulate in the exporter's New York premises, with no other possible outlet for them than the U.S. market itself. As the British Wool Textile Mission reported, after their visit to America in 1947, "unsold stocks of novelties and season goods are highly dangerous. The mere knowledge that such stocks exist (in New York) will put a weapon in the hands of the buyer, particularly of a certain type, and induce him to use the seller's stock commitment as a bargaining weapon to force prices down to a distress level."

Finally, we should not accept uncritically Mr. Hoffman's well-meant recommendation that British manufacturers should Americanise their methods and thereby reduce their selling-prices to within the reach of the average American citizen. Comparisons of relative productive efficiency are misleading, and if we were to

attempt to catch up with American output, in an effort to bring our prices down to American levels, we should be sacrificing the personal skill and craftsmanship which are the distinctive ingredients in our products.

It is regrettable that prominent spokesmen, in their' much- publicised pronouncements, should over-simplify our complex prob- lems. We shall not close the dollar gap by the methods that they have so far recommended. And we shall certainly not " catch up with the potential " (whatever that phrase may mean) unless we are willing—and able—to take great financial risks, attended by endless disappointments. The fluctuations of American taste and opinion come suddenly. and unpredictably, and American competition is the most ruthless in the world. Nevertheless, the American people are very susceptible to the wiles of clever " sales promoters," and in

this branch of marketing there is much that we can learn. Some weeks ago, at a meeting of the British Export Trade Research Organisation, Mr. Neville Blond remarked that " too many of our

attempts to sell British goods in America are little more than peddling, without any well-conceived, organised distributing system."

As evidence of what can be achieved by exporters who adopt whole- heartedly the American methods of sales promotion and distribution, Mr. Blond at that meeting showed to his audience a British plastic and nylon brush. He stated that 300,000 of those brushes had been sold at the price of one dollar each in the U.S.A., which, as he said, "is the home of the plastic industry."

The British Wool Textile Mission, on their return to the U.K., truthfully reported that " the American citizen is weaned on ' pro- motion,' he eats, sleeps, dresses, travels, and dies to it." As an illustration of the type of publicity which will attract the American public, the Mission devised the slogan: "Woven from heather-fed wool grown on the rolling Grampians." That is effective, and we are certainly quite capable of carrying out advertising and sales- promotion campaigns on the American model—if we can afford the cost, which is extremely high. But this is only one aspect of the export drive in the U.S.A., and smart salesmanship will only solve one of the many problems facing us in that country, which is already so abundantly supplied with " consumer goods."

Nowadays it is the statesmen themselves who—in an unprece- dented degree—make it possible, or impossible, for the business-man to sell and the client to buy. Just as, in so many other overseas markets, the British exporter is helpless to increase his sales, because his customers lack the necessary import permits (i.e. the necessary sterling for the importing of " consumer goods "), so, in the U.S.A., is he obstructed, not only by the inherent difficulties of the market, but also by artificial obstacles—such as the relatively high American customs tariff and the high rate of the pound in relation to the dollar. It is encouraging that some of the artificial obstacles are recognised in the three-Power communiqué that was issued in Washington this week. It remains to be seen what measures will be taken by the British and American authorities in their endeavour " to facilitate to the greatest extent feasible the expansion of dollar earnings."