As 2024 draws to a close, it’s a fitting time to reflect on what has been a pivotal year for UK manufacturing. Despite economic headwinds, geopolitical uncertainty, and supply chain disruptions, manufacturers across the UK have demonstrated remarkable resilience and adaptability. As someone deeply involved in supporting the sector through various programmes at RTC North, I’ve witnessed firsthand both the challenges and the promise of UK manufacturing, as reflected in the latest Make UK/BDO Manufacturing Outlook report (Q3 2024).

According to the report, UK manufacturing has shown a mixed performance throughout the year. While some subsectors faced challenges due to contracting domestic demand and margin pressures, others experienced growth driven by strong export markets and strategic investments in resilience. Notable highlights include:

Manufacturing output: The UK output balance turned slightly negative (-2%) in Q3 for the first time in four years, reflecting weaker domestic demand, however, optimism remains high.

Business confidence: Confidence reached a score of 7.1, a level rarely surpassed in the survey’s history. This reflects manufacturers’ belief in the sector's ability to overcome short term challenges and seize long term opportunities.

Employment and investment: Employment saw a modest contraction (-1%), but vacancies remain high, with over 60,000 roles still unfilled. Investment intentions remained robust, with a balance of +10%, marking seven consecutive quarters of positive investment activity.

Manufacturing continues to play a vital role in the UK economy, driving innovation, productivity, and global competitiveness. Export growth has been a critical factor, with export orders increasing by +11% in Q3, buoyed by strong demand from European markets.

However, the Make UK report warns of risks to profitability, with UK margins at -10% and export margins at -4%, underscoring the need for manufacturers to navigate competitive pricing pressures. Supply chain resilience also remains a priority, as 83% of manufacturers now regularly assess supply chain risks, while 72% have adopted strategies such as supplier diversification and inventory buffering.

As we step into 2025, UK manufacturing is well positioned to capitalise on key growth opportunities, despite lingering economic challenges. According to the Make UK/BDO report, areas of focus include:

Export growth: European markets continue to drive demand, with 55% of manufacturers reporting positive conditions in the region, particularly for automation and machinery technologies.

Digital transformation: Using technologies such as robotics, AI, and data-driven manufacturing are poised to drive further productivity gains, helping manufacturers remain globally competitive.

Geopolitical strategies: 55% of manufacturers reported adjusting supply chain strategies in response to geopolitical tensions, with many willing to pay a premium for localised supplies, presenting an opportunity to small to medium sized manufacturers to expand supply and break into new markets.

To realise these opportunities, a coherent national industrial strategy supported by regional devolution is essential. The Make UK report highlights manufacturers’ proactive approach to resilience and investment, but strategic policy support is needed to unlock further growth. This includes:

Investing in Skills: Addressing labour shortages through workforce development and upskilling.

Enhancing Infrastructure: Strengthening transport and digital infrastructure to support regional manufacturing hubs.

Building Partnerships: Encouraging collaboration between industry and academia to foster innovation.

Supply chain development: supporting small to medium sized manufacturers to capitalise on the trend towards localised supply.

At RTC North, our commitment to supporting UK manufacturing remains steadfast. We look forward to working with manufacturers, policymakers, and industry partners to unlock the true potential of the sector in 2025 and beyond.

Let’s continue building a future where UK manufacturing leads with innovation, resilience, and global competitiveness.