As the UK navigates its way through a challenging final quarter, MEPCA turns its attention to 2025 and considers how manufacturers can prepare for the coming year.

2024 has been rollercoaster ride for UK manufacturing. After a mixed performance at the start of the year, things picked up in Q2, but that momentum couldn’t be sustained throughout Q3, where output figures fell into the negative for the first time in 4 years*. While this is expected to improve in Q4, the sector is not predicted to fully recover until 2025.

The new Chancellor’s first Autumn Budget has provided some additional twists and turns. The cumulative effect of the raise to the National Living and Minimum Wages, the increases in Employer National Insurance contributions and changes to the related thresholds, as well as the increased cost of apprenticeships, will cause a fiscal headache for many manufacturers.

More positively, however, the Government has shown a long-term commitment to growth for UK manufacturing in its Industrial Strategy, with a focus on investment stability, and by showing its support of key initiatives, such as Made Smarter, as well as other measures to encourage innovation.

Despite the evident challenges, 2024 has seen numerous success stories in UK manufacturing, demonstrating that businesses remain confident, and, even more importantly, that the resilience of the UK’s supply chain is starting to return post-Covid, even in the face of continued geopolitical unrest.

While still trying end in the best possible position this quarter, many manufacturers already have their sights set firmly on 2025, which is expected to see growth of 0.8%, according to Make UK’s Manufacturing Outlook Survey Q3.

To help companies prepare for optimising growth in 2025, we sought out expert advice on three key areas: finance, marketing and recruitment.

Finance

Making informed financial decisions will help safeguard growth in 2025 and ensure that companies benefit from the opportunities available to them. For advice on financial strategies, MEPCA turned to Dave Atkinson, UK Head of Manufacturing SME & Mid Corporates at Lloyds.

What financial strategies should UK manufacturers consider adopting to optimise growth in 2025?

David Atkinson: SME manufacturers are poised for growth. Recent reports from Make UK and the ONS are forecasting a positive 2025, with increased output and orders. To take advantage of opportunities and achieve sustainable growth, firms should have effective financial forecasting and cashflow management front of mind. 

Regularly updated cashflow and profit forecasts allow for better strategic planning and informed decision-making when you are presented with growth opportunities, helps to ensure that your business has enough liquidity to meet its plans and avoid disruptions in production. Strong financial management also builds credibility with investors, lenders, and other stakeholders – all of whom can be critical to growth.

Getting this right can help manufacturers to invest in technologies that are driving growth across the sector, and to acquire, retain and cultivate the skill they need to implement them. Innovations like intelligent automation, robotics and AI are helping more firms to enhance productivity and reduce costs. Those at the forefront of adoption will be best placed for growth in the years ahead.

Strong supply chains are also critical. Amid ongoing disruption, manufacturers that are diversifying suppliers and investing in local sourcing will mitigate risk and avoid any roadblocks to growth. 

Marketing

With the cost of doing business increasing, it is even more crucial that manufacturers reach their target audiences and ensure they are communicating clearly with their customers. MEPCA sought advice on how to approach marketing 2025 from industrial marketing specialist Sarah West of Full Fix Marketing.

What key marketing trends should UK manufacturers look out for in 2025?

Sarah West: It’s a great question, as 2025 looks like it could be quite an opportunity for UK manufacturers! With the UK and US elections behind us, growing consumer and business confidence may fuel manufacturing. 

With fewer inflationary or supply chain pressures, successful marketing can once again focus on quality and capability – an area where UK manufacturers often outshine competitors.

With regards to which forms of marketing may be most effective next year, digital marketing will continue to play a key role. A business’s website is a likely stop-off point for anyone interested in what it delivers, so it has to create the right impression.

The growing importance of content marketing looks like it will continue in 2025, too, as customers look to businesses to demonstrate and prove their expertise through social media, articles and press coverage.  

Direct marketing may remain a game-changer for many manufacturers, particularly if competition continues to rise. If you know who you want to work with then going direct may be the quickest route to sales.

Recruitment

The growing skills shortage remains a major challenge for UK manufacturing that shows no sign of abating on entering 2025. Compounded by the increasing cost of hiring staff, it is ever more important that businesses place the right people in the right roles. To help manufacturers navigate their way through this challenging process, Russell Smith, Managing Director at Hunter Selection lends MEPCA his 30 years’ experience in the field.

What advice would you give UK manufacturers struggling to fill key positions? 

Russell Smith: Firstly, you are not alone. The demand for skilled staff, whether that be Engineers or Manufacturing Professionals still outstrips supply. The rapid increase in salaries in some roles across the sector, noticeably in Maintenance and Automation has made these areas very hard to recruit for. Thankfully, there are now signs of this cooling as inflation falls to more manageable levels and in turn wage expectations become more realistic.

As a hiring Manager, there are factors that you can control. When compiling your Job Specification, are you focused on the past or the future? Do soft skills and ‘trainability’ have as much value as experience and qualifications? Is your picture of the right candidate too narrow? Could you be more equitable and inclusive and attract a broader pool of applicants that way? 

Does the hiring manager know how to sell the organisation and the role, and what does the employee of 2024 expect? The vision, culture, values and flexibility of the employer business are becoming more and more important, above and beyond the salary and hours. The interviewee is picking their employer of choice, too. 

It is important to move fast in a competitive employment arena. Taking too long to go through each phase of the recruitment process is a huge turn-off to prospective employees and leaves you uncompetitive when good applicants will typically have 4 or 5 opportunities on the go at any one time. Ask yourself, can you make your recruitment processes quicker and more agile to get the competitive advantage? 

Conclusion

Uncertainty can be worse than bad news for businesses. At least now, with the promise of post-election stability, the autumn budget delivered and the Government having laid out its intensions for UK manufacturing in its green paper (Invest 2035: The UK’s Modern Industrial Strategy), businesses are able plan for the year ahead from a more informed position.

As demonstrated above, UK manufacturers also have a wealth of expert advice at their disposal, which will support them as they move into 2025.

* Make UK, Manufacturing Outlook 2024 Q3.