B. DATA ON BEST PROSPECTS FOR AGRICULTURE AND INDUSTRY SECTOR EXPORTS Ranking based on greatest estimated 2-year growth in U.S. exports, the best prospects in the UK's market are as follows: Industrial Goods: 1. Aircraft and Parts 2. Computer Software 3. Oil and Gas Field Machinery and Services 4. Telecommunications Services 5. Computers and Peripherals 6. General Consumer Goods 7. Automotive Parts and Services 8. Packaging Materials 9. Hotel and Restaurant Equipment 10. Biotechnology 11. Industrial Chemicals 12. Building Products 13. Apparel 14. Telecommunications Equipment 15. Pollution Control Equipment 16. Medical Equipment 17. Industrial Process Controls 18. Security and Safety Equipment 19. Pharmaceuticals 20. Books and Periodicals 21. Toys and Games 22. Laboratory and Scientific Equipment 23. Sporting Goods and Recreational Equipment 24. Cosmetics and Toiletries 25. Electrical Power Systems 26. Defense Equipment Agricultural Goods: Forest Products Seafood Tree Nuts Pet Food Agricultural goods are not ranked in any particular order of growth potential. Tourism (For details of industry and agriculture sector best export prospects for U.S. exporters: see Appendix B.) United Kingdom - Best Prospects: A) Rank of sector: 1 B) Name of sector: AIRCRAFT AND PARTS C) Three-letter ITA industry sector code: AIR (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 4,179 4,973 5,105 E) Total Local Production 7,386 8,806 9,043 F) Total Exports 9,156 10,948 11,223 G) Total Imports 5,949 7,115 7,286 H) Imports from the U.S. 2,708 3,356 3,617 I) Exchange Rates (US $) 0.658 0.658 0.658 Comments: The world aerospace industry faced a deepening downturn in military and commercial markets in 1993. The problems presented by excess capacity and lower levels of demand have led to a period of consolidation within the industry. Consequently, leading companies have been pursuing a variety of strategies in order to survive. Aircraft parts suppliers still remain resilient, however, as servicing ageing fleets continues. Moreover, projections for the commercial market are bright with the anticipated doubling of civil air traffic over the next fifteen years. The continued deregulation of the EU's air transport system and the proposed privatization of the U.K.'s air traffic control system will present major opportunities for US suppliers. A partial liberalization of EU air traffic came into effect on January 1, 1993 with "full cabotage", the right of any EU airline to fly any passengers anywhere in the EU, scheduled to take effect April 1, 1997. Long-term growth prospects for the EU are very positive, with European air passenger traffic expected to grow from 394 million in 1990 to over one billion by the year 2010. The United States continues to dominate the market for large airliners, although there is increasingly strong competition from the European Airbus Consortium. In the regional and commuter airliner market, competition is mainly from Canadian, French/Italian, German, Dutch, Swedish and Brazilian manufacturers. However, U.S. components account for a large percentage of the value of these aircraft sales. Aircraft subassemblies and parts: (US$ million) Civil: 2,181 Military: 1,101 Aero-engines, new and reconditioned: Civil: 2,773 Military: 799 (More accurate figures have recently been made available for the U.K. aerospace market. These have been incorporated into the above statistics and in some cases significantly alter previously submitted figures). United Kingdom - Best Prospects: A) Rank of Sector: 2 B) Name of Sector: COMPUTER SOFTWARE C) ITA Code: CSF (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 6,850 7,530 8,250 E) Total Local Production 4,955 5,715 6,425 F) Total Exports 965 1,135 1,325 G) Total Imports 2,860 2,950 3,150 H) Total Imports from U.S 1,285 1,550 1,700 I) Exchange Rate 0.658 0.658 0.658 Comments: Software sales are still growing at a high rate. Packaged PC software for business, leisure and education is in particularly high demand. DOS, Unix and Windows are key environments. Applications software for OS/2 and MacOS are sought after by business users. Some customization in the software and documentation may be required to make it fully acceptable to British users, particularly for financial applications. Locally-produced software is mostly for mainframes and for single users. Third-country competition is limited. Some Australian and Canadian packaged software is evident in niche applications. United Kingdom - Best Prospects: A) Rank of sector: 3 B) Name of sector: OIL AND GAS FIELD MACHINERY C) Three-letter ITA industry sector code: OGM (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 9,858 11,535 12,091 E) Total Local Production 9,392 11,011 11,161 F) Total Exports 1,358 1,835 1,964 G) Total Imports 1,824 2,359 2,894 H) Imports from the U.S. 661 891 982 I) Exchange Rates (US $) 0.658 0.658 0.658 Comments: Industry experts believe that the North Sea is far from "played out", even though it is considered, by some observers as a fully mature sector. U.K. capital investment in the North Sea currently stands at $8.8 billion per year, or 22 percent of the economy's total industrial investment. The industry believes that this figure will increase slowly but continuously throughout the '90's. There remain excellent opportunities for U.S. oil and gas industry suppliers, whose traditional expertise leads the world in exploration and production equipment technologies. The most promising sub-sectors are: (US$ millions) Seismic and Exploration Technology: 1,625 Platform Safety Equipment: 1,615 Underwater Equipment: 1,311 Emergency Shutdown Valves: 996 United Kingdom - Best Prospects: A) Rank of Sector: 4 B) Name of Sector: TELECOMMUNICATIONS SERVICES C) ITA Code: TES (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 760 920 1,070 E) Total Local Revenue 860 1,250 1,460 F) Total Service Exports 590 860 1,110 G) Total Foreign Revenue 490 530 720 H) Total U.S. Revenue 319 425 534 I) Exchange Rate 0.658 0.658 0.658 Comments: The rapidly expanding telecommunications-delivered services sector readily admits American value-added service providers. The services include electronic data interchange, database access, financial information services, transaction processing, and hotel and airline bookings. US companies compete on equal terms with local British and European service providers, except in the international carrier sector which is effectively reserved for the two British carriers, BT and Mercury. Third country competition has not yet developed. If it does, it is likely to be from European telecommunication carriers. United Kingdom - Best Prospects: A) Rank of Sector: 5 B) Name of Sector: COMPUTERS AND PERIPHERALS C) ITA Code: CPT (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 14,580 16,780 18,980 E) Total Local Production 11,460 12,600 14,650 F) Total Exports 12,380 13,950 15,300 G) Total Imports 15,500 18,130 19,630 H) Imports from U.S. 1,850 1,940 2,035 I) Exchange Rate 0.658 0.658 0.658 Comments: Heavy discounting by distributors and dealers has helped to keep sales of personal computers and workstations buoyant. Sales of business minicomputers are flat, however, industrial applications show increased growth, but the mainframe computer sector continues its gradual decline. Sales of peripherals, board-level extensions and add-on options are gradually recovering from the effects of the last general recession in the UK. Third country competition is from Pacific rim countries and local assemblers. United Kingdom - Best Prospects: A) Rank of sector: 6 B) Name of sector: GENERAL CONSUMER GOODS C) Three-letter ITA industry sector code: GCG (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 4,666 5,620 5,777 E) Total Local Production 5,454 6,538 6,614 F) Total Exports 3,434 4,116 4,175 G) Total Imports 2,646 3,198 3,338 H) Imports from the U.S. 608 734 770 I) Exchange Rates (US $) 0.658 0.658 0.658 Comments: From apparel to household goods, a wide range of American consumer goods have a high degree of receptivity with the British public. Industry experts predict that consumer spending will increase by 17 percent in real terms during the next five years. Opportunities for U.S. firms are particularly strong in household and garden products, school and medical-related services. There is quite strong competition from third country exporters of East Asia and continental Europe. United Kingdom - Best Prospects: A) Rank of sector: 7 B) Name of sector: AUTOMOTIVE PARTS AND SERVICE EQUIPMENT C) Three-letter ITA industry sector code: APS (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 10,759 12,584 13,608 E) Total Local Production 9,483 11,116 11,368 F) Total Exports 5,289 6,239 5,511 G) Total Imports 6,565 7,707 7,751 H) Imports from the U.S. 274 367 413 I) Exchange Rates (US $) 0.658 0.658 0.658 Comments: This sector, which slumped badly during the last recession, showed signs of a strong recovery in the latter half of 1993. Industry experts now believe that growth will approximate 4 percent through 1994 and beyond. Ford and General Motors continue to dominate the U.K. automotive market through their long-established U.K. and other European operations. Japanese manufacturers Nissan, Toyota, and Honda continue to invest heavily in their relatively new manufacturing facilities and are using the U.K. as a stepping stone to increase sales in continental EU countries. Peugeot of France has also transferred some production to the United Kingdom. The local market is receptive to all types of U.S. automotive products, particularly those incorporating new and advanced technologies. United Kingdom - Best Prospects: A) Rank of sector: 8 B) Name of sector: PACKAGING MATERIALS C) Three-letter ITA industry sector code: PMR/PAP (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 15,038 17,832 18,084 E) Total Local Production 14,590 16,988 17,258 F) Total Exports 1,029 933 982 G) Total Imports 1,477 1,777 1,808 H) Imports from the U.S. 191 294 310 I) Exchange Rates (US $) 0.658 0.658 0.658 Comments: The packaging industry, again on a growth track after the U.K.'s recent recession, is facing challenges raised by increased public awareness of environmental problems, particularly associated with waste disposal of excess packaging. This is leading to fundamental changes in the design of packaging and the materials used in an attempt to promote a "greener image" to the customer. The domestic market for all types of packaging remains highly competitive, with Germany and the netherlands already strongly positioned in the U.K. The local market is receptive to U.S. products which are slowly but steadily increasing their market share. The most promising sub-sectors are: Paper and Board: 6,816 Plastic: 4,729 Metal: 4,509 Glass: 891 United Kingdom - Best Prospects: A) Rank of sector: 9 B) Name of sector: HOTEL & RESTAURANT EQUIPMENT C) Three-letter ITA industry sector code: HTL (in US$ millions) 1993 1994 1995 (est.)(Forecast) D) Total Market Size 5,357 6,344 6,810 E) Total Local Production 4,235 4,960 5,364 F) Total Exports 1,246 1,468 1,499 G) Total Imports 2,368 2,852 2,945 H) Imports from the U.S. 495 593 610 I) Exchange Rates(US $) 0.658 0.658 0.658 Comments: The hospitality sector is a major force in the British economy, generating sales revenues of US$55.65 billion in 1993. Confidence in the U.K. hotel industry is running at its highest level for two years. In London, growth in foreign visitors stimulated by sterling's recent devaluation translated into a room-occupancy increase of 6 percent in 1993. With a further increase of around 3 percent projected for 1994, the confidence of developers, who recently completed several hotel projects, seems justified. The sluggishness of the major economies of continental Europe has translated into increased competition for U.S. exporters from European hotel equipment suppliers. Third country competition is from France, Italy and Germany and includes the brand names Electrolux, Zanussi, AEG, Juno and Stott Benham. Many American firms are represented locally either through subsidiaries or agents. Best subsectors for U.S. suppliers include: (est. in US$ millions) - information technology products 925 or automated systems for hotel management: - 'sous vide' or vacuum 600 cooking equipment: - security equipment and systems 500 for hotels: United Kingdom - Best Prospects: A) Rank of sector: 10 B) Name of sector: BIOTECHNOLOGY C) Three-letter ITA industry sector code: BTC (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 1,750 1,900 2,120 E) Total Local Production 2,090 2,260 2,520 F) Total Exports 890 980 1,075 G) Total Imports 550 620 675 H) Imports from the U.S. 210 255 300 I) Exchange Rates (US $) 0.658 0.658 0.658 Comments: The United States continues to be the recognized world leader in biotechnology as a result of its enormous research and development spending and its strength in commercialization. There are challenges in the United Kingdom and EU markets posed by occasional political aversion to some products; for example, the delay of approval of Bovine Somatotropin (BST), the milk producing hormone. But, in medicare, it is generally easier to obtain approval of products than in the United States. The U.K.'s biotech firms tend to be fewer but larger on average than those in the United States, due perhaps to a less entrepreneurial culture. The bigger firms, especially in the pharmaceutical sector, are very significant in world terms and offer opportunities as trade partners for U.S. suppliers. There is moderate competition to U.S. firms from domestic UK suppliers, and little competition from third countries United Kingdom - Best Prospects: A) Rank of sector: 11 B) Name of sector: INDUSTRIAL CHEMICALS C) Three-letter ITA industry sector code: ICH (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 12,050 12,900 14,160 E) Total Local Production 14,000 15,100 16,400 F) Total Exports 9,450 10,300 11,200 G) Total Imports 7,500 8,100 8,960 H) Imports from the U.S. 585 270 295 I) Exchange Rates(US $) 0.658 0.658 0.658 Comments: The European chemicals industry has suffered from chronic overcapacity in the last few years, but the demand for industrial chemicals in the U.K. is vast. The main external sources for general chemicals are European, and include suppliers from Germany, France and Italy. Adhesives and sealant products offer a particular opportunity for U.S. exporters. This subsector of the chemical industry is relatively concentrated, with twenty-five firms dominating the domestic market. End-user customers are looking for new ways of joining ever more complicated materials and receptivity to new products in this area is high. Many U.K. firms have expressed considerable interest in representing U.S. adhesive suppliers. United Kingdom - Best Prospects: A) Rank of sector: 12 B) Name of sector: BUILDING PRODUCTS C) Three-letter ITA industry sector code: BLD (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 14,419 17,564 18,695 E) Total Local Production 14,714 17,874 18,927 F) Total Export 2,322 2,753 2,764 G) Total Imports 2,027 2,443 2,532 H) Imports from the US 339 414 424 I) Exchange Rates(US $) 0.658 0.658 0.658 Industry Comments: U.K. construction activity is forecast to rise overall by 2 percent in 1994. The domestic housing market is in the forefront of the recovery from the recession, as the effect of recent mortgage rate reductions has led to cheaper borrowing. As new home owners embark on refurbishments, prospects for the Do-It-Yourself (D-I-Y) market, one of the building products primary subsectors, will strengthen dramatically (estimated market size US$12,000 million). The competition for U.S. exporters in most areas of the building products market is considerable, but U.S. imports are generally perceived as having superior quality, particularly suited to the upper end of the market. Third country competitors include France, Germany, as well as the Far East. Good opportunities also exist for suppliers of bath and shower equipment and accessories (estimated market size US$1,700 million), as well as for all types of insulation products (estimated market size US$1,750), as Britain's older housing stock is updated. United Kingdom - Best Prospects: A) Rank of sector: 13 B) Name of sector: APPAREL C) Three-letter ITA industry sector code: APP (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total market size 10,480 12,295 12,479 E) Total Local Production 8,517 10,067 10,257 F) Total Exports 2,924 3,592 3,746 G) Total Imports 4,887 5,820 5,968 H) Imports from the U.S. 293 357 377 I) Exchange Rates(US $) 0.658 0.658 0.658 Comments: The overall U.K. population is increasing at a slight 0.12 percent annual rate with significant differences in the growth patterns of age bands. The number of 0-4 year-olds is expected to grow by 3.6 percent between 1991 and 1996, sustaining the buoyant market for infantware. During the same period the market for 5-14 year-olds is projected to rise by 5.6 percent. Several market segments are perceived as poorly served, and present opportunities for U.S. companies. A prime example is the market for young teenagers, which falls beyond the range of specialist children's retailers. Currently, children in this category must buy small sizes at adult retailers. Among this group sports styles are particularly favored. The 45-64 age group will grow by 7.2 percent between 1991- 1996, with a further 4.6 percent growth, to a total of 13.9 million customers, anticipated by the year 2001. These 'grey' or 'golden' consumers are a style-aware generation, who now enjoy the freedom and resources to frequent more fashionable specialist outlets. There is thus tremendous potential for U.S. manufacturers in all kinds of apparel. On the retail side, there are already many familiar names on British main streets: The Gap, Esprit, Ralph Lauren, and for children, Baby Gap and Osh Kosh. Major U.S. designer Donna Karan is about to open her first U.K. flagship store on London's Bond Street and Calvin Klein is also planning a flagship in mainland Europe. Competitive Environment: The UK market now takes an increasing number of women's fashion from the European Union. Traditional suppliers include France, Germany, Italy and Hong Kong. Casual menswear is sourced mainly from the Far East, and more formal wear from Eastern Europe and Portugal. Highly-priced menswear originates from France, Italy and Germany. Less expensive children's clothing is imported from the Far East, and more expensive brands from France, Italy and Holland. United Kingdom - Best Prospects: A) Rank of Sector: 14 B) Name of Sector: TELECOMMUNICATIONS EQUIPMENT C) ITA Code: TEL (US$ millions) 1993 1994 1995 D) Total Market Size 6,240 6,460 6,640 E) Total Local Production 6,045 6,195 6,350 F) Total Exports 1,530 1,615 1,820 G) Total Imports 1,725 1,880 2,110 H) Imports from U.S. 210 240 275 I) Exchange Rate 0.658 0.658 0.658 Comments: There are good opportunities for sales of customer premises equipment and terminal equipment for attachment to the established public switched networks. New networks and new carriers are being licensed that present additional opportunities for sales of switching and transmission equipment. There are EU and national standards that must be met, and a stringent approval process for equipment that will be directly attached to the public switched network. The carriers in Britain have selected Northern Telecom of canada as the supplier of choice for switching and transmission equipment. Principal third country competitors in subscriber premises equipment are European and Japanese. United Kingdom - Best Prospects: A) Rank of Sector: 15 B) Name of sector: POLLUTION CONTROL EQUIPMENT C) Three-letter ITA industry sector code: POL (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 2,760 3,030 3,310 E) Total Local Production 2,180 2,430 2,690 F) Total Exports 380 450 540 G) Total Imports 960 1,050 1,160 H) Imports from the U.S. 220 245 285 I) Exchange Rates(US $) 0.658 0.658 0.658 Comments: The main market for pollution control equipment in the United Kingdom is in its application in the elimination of contaminated air by industrial processes. In recent years, the United Kingdom has increased regulatory standards for air pollution. Up to 1993, the power station operators were major spenders on desulfurization equipment to reduce the pollution from burning Britain's sulfurous coal. A combination of reduced dependence on sulfurous coal and increased use of natural gas are beginning to reduce the market for this type of equipment. Water pollution is also a key environmental issue for the United Kingdom, as is addressing the challenge of land remediation. Beginning in the early 1990's, the implementation of EU directives issued governing standards of water purity is leading to increased levels of spending on this sub- sector. Third country exporters pose little threat to U.S. suppliers in the UK market. The U.S. is second only to Germany in air pollution control, and in water plooution control France has less than half the U.S. import share of the UK market. U.S. suppliers are faced with only moderate competition from local suppliers. The market is expected to grow by about 10% a year from 1994-95. Reduced spending by the electricity utilities will be more than offset by increased expenditures by manufacturing industry as part of a rising trend of corporate capital investment. Addressing land contamination will be of growing importance in the long term, but will remain at relatively low levels of spending for the immediate future. United Kingdom - Best Prospects: A) Rank of Sector: 16 B) Name of sector: MEDICAL EQUIPMENT C) Three-letter ITA industry sector code: MED (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 1,710 1,880 2,010 E) Total Local Production 2,090 2,290 2,460 F) Total Exports 1,450 1,610 1,720 G) Total Imports 1,070 1,200 1,270 H) Imports from the U.S. 355 390 415 I) Exchange Rates(US $) 0.658 0.658 0.658 Comments: Major organizational changes in the National Health Service (NHS), the main purchaser of medical equipment in the United Kingdom, have led to: - The establishment of a new purchasing authority, "NHS Supplies". This authority intends to become the chosen supplier of goods to all major health service hospitals, although its long-term success will depend on developing a cost advantage. NHS Supplies is expected to achieve the benefits of a nation-wide supply organization with a coherent strategy and a common goal. American suppliers can potentially conduct all their NHS business through this one purchasing authority. - The creation of the NHS Trusts, self-governing hospitals with the freedom to manage their own budgets. With managers now able to order their own equipment, the focus for suppliers will be on encouraging customers to replace old and more labor-intensive machinery with more productive equipment. This will present opportunities for U.S. suppliers capable of demonstrating increases in productivity gained by using their products. - The facility for General Practitioners (GPs) to manage their funds. The government has given GPs autonomy to order their own equipment and the opportunity to become fund-holders (responsible for the finances of their own practices). The GP fund-holders are now able to purchase services for their patients from any provider, including the private sector. The traditional boundaries between the NHS and the private health care sector are being eroded, as the Department of Health has determined that the NHS could use limited resources more efficiently and effectively through closer links with the private sector. Private health operators can be competitive for contracts from the NHS trusts and improve services to consumers. Costs of individual health care procedures are expected to fall and general standards to improve. These changes can benefit U.S. exporters of hospital equipment and services. Despite heavy competition from third country exporters, and moderate competition from domestic UK suppliers, U.S. firms control a third of the import market and a fifth of the total market. Advanced technology and experience in selling to the cost- conscious private sector give U.S. suppliers a significant edge. United Kingdom - Best Prospects: A) Rank of Sector: 17 B) Name of sector: INDUSTRIAL PROCESS CONTROLS C) Three-letter ITA industry sector code: PCI (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 1,820 1,920 2,020 E) Total Local Production 2,500 2,650 2,850 F) Total Exports 1,700 1,830 2,050 G) Total Imports 1,020 1,100 1,220 H) Imports from the U.S. 240 270 295 I) Exchange Rates(US $) 0.658 0.658 0.658 Comments: Process controls are experiencing growing sales with new investment in the upgrade and replacement business. Companies are now seeking integrated process control solutions to improve process efficiency, quality control and environmental data monitoring. The trend is towards increasingly sophisticated software control, but data bus standardization has yet to be agreed upon. New intelligent sensors also show good growth prospects. U.S. suppliers face moderate competition from both local and third country suppliers. United Kingdom - Best Prospects: A) Rank of Sector: 18 B) Name of Sector: SECURITY & SAFETY EQUIPMENT C) Three-letter ITA industry sector code: SEC (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 2,538 3,356 3,772 E) Total Local Production 2,370 3,104 3,462 F) Total Export 472 587 620 G) Total Imports 640 839 930 H) Imports from the U.S. 120 152 171 I) Exchange Rates(US $) 0.658 0.658 0.658 Comments: The recent rapid growth in the security products sector has been partly fuelled by a rising crime rate, and a consequent increase in public and commercial awareness of the need to protect people and property. The market includes; electronic security systems, such as intruder alarms; physical security, like locks; and personnel security, covering static and mobile guards. The market does not include product groups directly related to defense or fire protection. The local market is highly receptive to U.S. products, particularly those incorporating new or advanced technologies. Far eastern manufacturers are extremely active in the components market. Local and overseas competitors include Chubb, Abel, Thorn Security and EMKA. Many American firms are already active in the market, either through trading subsidiaries, such as Sensormatic and Wackenhut, or long-established representatives, such as Best Lock and Schlage. The most promising sales areas for U.S. suppliers include; (est. in $ millions) - domestic security equipment 585 - security devices to combat automobile crime 350 - security guarding and related service industries 550 United Kingdom - Best Prospects: A) Rank of sector: 19 B) Name of sector: PHARMACEUTICALS C) Three-letter ITA industry sector code: DRG (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 7,186 7,970 8,550 E) Total Local Production 7,800 8,650 9,350 F) Total Exports 2,314 2,600 2,900 G) Total Imports 1,700 1,920 2,100 H) Imports from the U.S. 251 285 310 I) Exchange Rates(US $) 0.658 0.658 0.658 Comments: The United Kingdom has a world-leading pharmaceutical industry within a relatively small domestic market. In sixth place in terms of production by country, it accounts for 6 percent of global pharmaceutical production. The domestic market for pharmaceuticals is relatively small, accounting for an estimated 3 percent of the global market and for little more than 10 percent of EU demand. Domestic UK drug manufactuers provide healthy competition to U.S. suppliers, who also face strong competition from German and Swiss- owned manufacturers. The United Kingdom offers health care and prescription medicines to all citizens (through the National Health Service) and yet, on the basis of 1990 data, only spent just over 6 percent of GDP on health care. About 15 percent of the working population have chosen to "top up" their level of care by subscribing to private medical insurance. The NHS drug bill has risen 12 percent per year over the last two years. This is leading to two distinct moves by the government. The first is the creation of a "black list" of products that the NHS will not pay for; physicians are encouraged to prescribe generic drugs whenever possible. And the second is the widening of the range of over-the-counter (OTC) drugs. Until recently only low dose pharmaceuticals could be bought "OTC," but, higher strength medications have been allowed. The standard prescription charge of approximately $6 for any one prescription item acts to encourage patients to buy less expensive drugs. United Kingdom - Best Prospects: A) Rank of sector: 20 B) Name of sector: BOOKS AND PERIODICALS C) Three-letter ITA industry sector code: BOK (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 4,367 5,270 5,457 E) Total Local Production 4,743 5,731 5,968 F) Total Exports 1,030 1,258 1,338 G) Total Imports 654 797 827 H) Imports from the U.S. 172 208 217 I) Exchange Rates(US $) 0.658 0.658 0.658 Comments: A striking feature of the retailing sector over the past few years has been the increase in the number of stores opened by the large domestic U.K. retailers, such as Dillons and Waterstones. These new operations offer a far wider range of titles than W.H. Smith and Menzies, the two omnipresent chain stores. Another dominant feature of the market is the proliferation of cut-price bookstores, offering large discounts. Audio and visual books, which offer a continually expanding range of authors, are another growing sub-sector. Some U.S. publishers, such as Random House and Harper Collins, have opened separate audio book divisions. The U.S. is the largest exporter of books to the United Kingdom. European publishers account for much of the balance of the import market. United Kingdom - Best Prospects: A) Rank of sector: 21 B) Name of sector: TOYS AND GAMES C) Three-letter ITA industry sector code: TOY (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 1,165 1,406 1,473 E) Total Local Production 488 577 610 F) Total Exports 273 325 336 G) Total Imports 950 1,154 1,199 H) Imports from the U.S. 142 173 181 I) Exchange Rates(US $) 0.658 0.658 0.658 Comments: More than half of the 200 million toys purchased each year in Britain are sold as Christmas gifts. The estimated annual expenditure on toys per child is US$200.00, approximately US$130.00 of which is spent during the Christmas season. There are currently one billion toys in use in British homes. Imports, primarily from Japan and the Far East, account for a large part of UK's toy market. However, many U.S. suppliers, such as Fisher Price and Mattel are highly visible. United Kingdom - Best Prospects: A) Rank of sector: 22 B) Name of sector: LABORATORY AND SCIENTIFIC INSTRUMENTS C) Three-letter ITA industry sector code: LAB (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market size 1,607 1,663 1,750 E) Total Local Production 2,086 2,170 2,350 F) Total Exports 1,072 1,130 1,260 G) Total Imports 593 623 660 H) Imports from the U.S. 218 235 255 I) Exchange Rates(US $) 0.658 0.658 0.658 Comments: The British market for laboratory and scientific equipment declined during the last recession; recovery in demand has since picked up. While the scientific community continues to update its equipment, sales have been affected by financial cutbacks at U.K. academic institutions. Many industries that use scientific instruments (the steel industry in particular) have been slow to regain sustained growth following the recession. One particular weakness is in monitoring process-equipment, important for the metals industry. However, as the economy continues to strengthen, a strong sales performance can be expected. The receptivity to U.S. equipment is particularly high, which helps U.S. suppliers compete against strong competition from local suppliers and moderate competition from third countries. United Kingdom - Best Prospects: A) Rank of sector: 23 B) Name of sector: SPORTING GOODS & RECREATIONAL EQUIPMENT C) Three-letter ITA industry sector code: SPT (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 805 1,007 1,084 E) Total Local Production 415 509 562 F) Total Exports 173 210 227 G) Total Imports 563 708 749 H) Imports from the US 119 147 155 I) Exchange Rates(US $) 0.658 0.658 0.658 Comments: Sports activities in the U.K. have grown spectacularly over the last decade, driven by increased public consciousness of the importance of general health and fitness. The sporting goods industry is still struggling, however, to shake off the worst effects of the last recession. It has yet to regain as high a growth level as it attained during the eighties. Sales of exercise equipment designed for use in the home held up well during the economic downturn. Imports form a considerable part of the estimated US$35 million for this market. Equipment used in gyms, and at home, for exercising and improving overall fitness has become increasingly sophisticated. Demand is growing for equipment incorporating a simulated competitive environment, which maintains motivation and stimulates interactive exercise. Golf still ranks as one of the fastest growing sports with American equipment in high demand. The market for golf and golfing equipment is valued at US$70 million. Main competitors in the golf market are Daiwa, and Mizuno, although numerous U.S. firms such as Wilson, Spalding and Acushnet are well- established locally. Similarly, in the area of fitness equipment, York Barbell, Weider and other American manufacturers are local market leaders. United Kingdom - Best Prospects: A) Rank of sector: 24 B) Name of sector: COSMETICS AND TOILETRIES C) Three-letter ITA industry sector code: COS (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 3,267 3,869 3,959 E) Total Local Production 3,490 4,142 4,253 F) Total Exports 930 1,112 1,152 G) Total Imports 707 839 858 H) Imports from the U.S. 90 113 122 I) Exchange Rates(US $) 0.658 0.658 0.658 Comments: The most interesting feature of this market is the growing importance of men's toiletries, which have expanded to include fragrances, cleansers, toners and creams. Considerable opportunities for growth also exist in the already buoyant skin care market, most notably for hypo-allergenic and therapeutic skin products. Ethnic cosmetics constitute a small but expanding niche market. Major U.S. companies include Estee Lauder and Revlon. Unilever, the Anglo-Dutch group have a major presence through their Elizabeth Arden and Calvin Klein Cosmetics subsidiaries. L'Oreal of France and its subsidiary, Helena Rubinstein are major players. Kao ans Shiseido, the Japanese giants, are expanding into the United Kingdom. Major UK manufacturers supply primarily generic brands for the major chain stores. The 'natural cosmetics' market is mainly UK-based. United Kingdom - Best Prospects: A) Rank of sector: 25 B) Name of Sector: ELECTRIC POWER SYSTEMS C) ITA Code: ELP (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 5,420 5,365 5,520 E) Total Local Production 7,820 7,410 7,680 F) Total Exports 2,895 2,575 2,845 G) Total Imports 495 530 685 H) Total Imports from U.S. 22 29 35 I) Exchange Rate 0.658 0.658 0.658 Comments: The 1993 U.S.- EU reciprocal market access agreement for power utilities has expanded opportunities for US exporters to bid for public sector contracts. Also, there are reasonable private sector market opportunities for American exports of standby power systems and small- scale combined heat and power (CHP) plant. The presence of independent power producers is growing in the UK market. The European power generation equipment manufacturing industry is highly competitive, and is currently bidding EU projects "at cost" in order to maintain industrial capability intact. Nuclear power prospects and increased need for combustion technologies are likely to boost prospects for US exporters in the medium-term. Third country competition is from Germany, France and Sweden. United Kingdom - Best Prospects: A) Rank of sector: N/A B) Name of sector: DEFENSE EQUIPMENT C) Three-letter ITA industry sector code: DFN (US $ millions) 1993 1994 1995 (est.)(forecast) D) Total Market Size 13,071 12,232 12,142 E) Total Local Production 13,563 12,809 12,722 F) Total Exports 1,992 1,877 1,860 G) Total Imports 1,500 1,300 1,280 H) Imports from the U.S. 380 342 342 I) Exchange Rates(US $) 0.658 0.658 0.658 Comments: Like most western countries, the UK defense budget is being trimmed. As a result, a "best value for money" policy has been adopted. Competition is key; it will be expanded by "market testing" proposals which will allow private firms to bid for such traditional military tasks as aircraft maintenance and certain transport roles. Due to budgetary constraints, the acquisition process has focused increasingly on "off the shelf" systems, and money for research and development has been limited. While significant opportunities do exist, the competition for contracts has intensified as more firms are bidding for fewer jobs. Major defense projects offering opportunities for U.S. business in the defense sector include: Aircraft and parts for the Attack Helicopter, Airlift Modernization, Maritime Patrol Aircraft Replacement programs, Mission Systems Integration technology for various major equipment procurement programs (as prime contractor or sub-contractor) and major sub-contracting opportunities in the electronic component/test equipment and telecommunications equipment fields. Other best prospects for U.S. firms include: aircraft, electronics industry production and test equipment, electronic components, avionics and ground support equipment, lasers and electro-optics, and telecommunications equipment. Construction and engineering services and computer and software services present the greatest defense sector business opportunities within the service categories. Major defense competitions during the next two years are: Airlift Modernization; Conventionally Armed Standoff Missile (CASOM); Laser Guided Bombs; ASTOR Ground Surveillance Aircraft; Air Launched Anti-Armor Weapon; Attack Helicopter; Bowman Combat Radio; Advanced Airborne Infrared Countermeasures; Tactical Reconnaissance Armored Combat Equipment Requirement (TRACER); Maritime Patrol Aircraft Replacement; and Sea King Airborne Early Warning Helicopter Upgrade. Please note that figures on imports and exports of defense equipment are only rough estimates as the sector is generally broken up to be included under such categories as aircraft and parts, computer software, electrical, etc. Procurement Budget, 1994/95 (US $ millions): Devlp. Prod. Total Air Systems 1,140 3,466 4,606 Sea Systems 667 3,116 3,783 Land Systems 456 2,402 2,858 General Support 806 1,262 2,068 Research 912 Totals 3,070 10,245 14,227 United Kingdom - Best Prospects: A) Name of sector: FOREST PRODUCTS ('000 cubic meters) 1991 1992 1993 B) Total Market Size 19,847 20,056 20,993 C) Total Local Production 10,660 10,669 11,639 D) Total Exports 306 397 394 E) Total Imports 9,493 9,784 9,748 F) Imports form U.S. 577 626 604 Comment: This table includes roundwood, softwood lumber, temperate hardwood lumber, tropical hardwood lumber, softwood veneer, temperate hardwood veneer, tropical hardwood veneer, softwood plywood, temperate hardwood plywood, tropical hardwood plywood, hardboard, medium density fiberboard, insulation board, and particle board. Temperate hardwood lumber and softwood plywood represent the sectors with the greatest U.S. Imports at 120 and 350 thousand cubic meters respectively. Third country competitors in the temperate hardwood sector are Canada and Germany, but the U.S. Is by far the largest supplier. Canada is also the major competitor in the softwood plywood sector of the forest products market. United Kingdom - Best Prospects: A) Name of sector: TURKEY MEAT ('000 metric tons) 1991 1992 1993 1994 1995 B) Total Market Size 228 235 238 251 255 C) Total Local Production 246 249 255 260 263 D) Total Exports 38 39 41 38 36 E) Total Imports 20 22 24 29 28 F) Imports from the U.S. 1 6 4 4 4 Comments: Although the UK is a net exporter of turkey meat, imports of turkey breast meat are required to fulfill consumer preference. Imports of processed turkey meat are bound under GATT at a tariff rate of 17 percent. This binding avoids the EU sluice gate price. Under the U.S. - EU Blair House Agreement this rate will be halved to 8.5 percent with GATT implementation. United States processed turkey meat is presently bought by UK retailers and further processors. France and the Netherlands are the major competitors. United Kingdom - Best Prospects: A) Name of sector: SEAFOOD ('000 metric tons) 1991 1992 1993 B) Total Market Size 614 672 677 C) Total Local Production 570 599 599 D) Total Exports 384 413 365 E) Total Imports 428 486 443 F) Imports form the US 30 29 28 U.S. Seafood is generally competitive on both price and quality, especially in the high value seafood sectors. The most promising subsectors within the seafood market are, and are likely to be, crab and crab meat, and other specialty products. However, salmon remains by far the largest single U.S. Seafood export to the UK. The major third country competitor in both farmed and seafish is Norway. United Kingdom - Best Prospects: A) Name of sector: TREE NUTS ('000 metric tons) 1991 1992 1993 B) Total Market Size 21 21 21 C) Total Local Production -- -- -- D) Total Exports 3 4 4 E) Total Imports 24 25 25 F) Imports from U.S. 12 13 11 United States tree nuts continue to be competitive on quality and to a lesser degree on price. The above table includes the four major tree nut varieties imported to the market - almonds, pecans, pistachios and walnuts. The most promising subsectors within the tree nut market are almonds and pecans. Major third country competition comes from China, India and Iran. United Kingdom - Best Prospects: A) Name of sector: PET FOODS ('000metric tons) 1991 1992 1993 A) Total Market Size 1,414 1,415 1,403 B) Total Local Production 1,398 1,348 1,248 C) Total Exports 180 192 148 D) Total Imports 196 259 303 E) Imports from U.S. 12 18 24 Local production dominates the canned "moist" pet food market but imports are rising as demand for other types of pet food increases. The most promising subsectors for imports are complete dry dog food, dietary products and treats. Major third country competition comes from Thailand with intra-EU trade also supplying the market. United Kingdom - Best Prospects: Tourism: The U.S. continues to be the top long-haul destination for Britons, although summer 1994 bookings are down from 8 percent of the market in 1993 to 5 percent in 1994, due largely to a decline in Florida bookings. The UK market shows continued potential for growth, both with first- time visitors to the U.S., as well as with repeat travelers exploring further afield to lesser known destinations. UK tour operators report opportunities for niche marketing by U.S. destinations and attractions. More than 70 percent of British visitors are repeat business and express an increasing interest in seeing the "Real America." This offers potential for U.S. lesser-known destinations and attractions to capitalize on the British desire for variety and expand product offerings beyond the well-known destinations and attractions. UK tour operators see particularly good opportunities for market expansion by U.S. destinations in: Fly-drive itineraries; bed and breakfast/guest house/accommodation alternatives; short breaks/shopping weekends/sporting events; ranch holidays; recreational vehicle (RV) rental; "soft" adventure; and senior citizen long-stay winter breaks. In addition to addressing safety issues, focusing on value-for- money and new destination possibilities in the United States is important to ensure the continued growth of this market.