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2025; Entering a new era of ambition
Read time: 2 mins Added: 17/01/25
There is no doubt that the UK manufacturing sector punches above its weight. But, despite its role as a key driver of innovation, exports and employment, there is still a lingering feeling that it has not achieved its full potential, particularly since the recession of 2008.
Experts have lined up to give their verdict why, and time and again they come back to the issue of underinvestment. That’s been blamed on the uncertainty that has characterised the last few years and encouraged a tendency towards short-termism.
Shunning short-termism
Manufacturers have had choppy waters to navigate, and companies will understandably be reticent to commit capital to long-term projects when the domestic and international outlook has been so hard to forecast. But it now feels like we have turned a corner, and 2025 could be the time to put our foot on the accelerator.
The new Government has pledged to forego short-term economic policymaking in favour of a more stable policy environment. Crucially, that will include a long-term industrial strategy designed to promote greater investment, which is due in the spring. And a new Corporate Tax Roadmap provides some certainty around capital allowances and R&D reliefs.
Plan and invest
At the same time, there is an appetite to deepen trade ties with the EU and fund green and growth industries. It’s a particularly auspicious time for certain sub sectors of manufacturing, including renewables, life sciences and defence, which will see billions in additional allocated funding and a move to securitise supply chains through reshoring.
All this should embolden manufacturers to plan and invest for the longer-term with greater confidence than in recent times.
Even the smallest manufacturing businesses are now finding applications for Artificial Intelligence, which is a technology that looks likely to become ubiquitous. Automation and robotics must also be on the agenda as we work to make ourselves more productive and therefore competitive. That’s already happening.
Investing in ambition
My colleagues at LDC, the private equity investor which is part of Lloyds Banking Group, have recently invested in Integrated Doorset Solutions (IDSL). The transaction will inject millions of pounds into the business to invest in capital equipment that will generate operational efficiencies and grow capacity, driving organic growth. And it will also provide the opportunity to make complementary acquisitions.
In many ways, IDSL is a traditional manufacturer, making specialist doors in the manufacturing heartlands of the East Midlands. But it is also a shining example of an ambitious, innovative, high-quality SME that has taken the opportunity to secure equity investment to support its long-term growth ambitions.
Unlocking potential
Leaders across the sector acknowledge that challenges remain - for example, there’s still a need for firms to be investing in cybersecurity and skills. However, there is now a renewed belief in British manufacturers and a determination to create a more supportive environment in which they can achieve their full potential.
Manufacturers should take heart from this and take the leap into this new era of ambition with a renewed confidence.
Meet the author
Dave Atkinson
UK Head of Manufacturing SME & Mid Corporates
Lloyds Banking Group is a financial services group that incorporates a number of brands including Lloyds Bank. More information on Lloyds Banking Group can be found at lloydsbankinggroup.com.