Manufacturers missing out on £10bn investment potential

24 April, 2024

According to the report, unlocking manufacturers’ investment potential through access to private and public sources of finance could be worth £9.2bn in the next twelve months alone (1). This would be additional to the annual investment in capital equipment (£33bn) and R&D (£19bn).

Boosting investment is critical to the sectors’ efforts to improve productivity and innovation performance given the top priorities for investment are capital equipment (62%) while access to finance will be required for investment in automation and energy efficiency by a third of companies (32% and 31% respectively). Furthermore, the report also shows almost three quarters of companies (70%) said that investment would not take place without access to finance, while just under a third (30%) said their investment would have taken place without any access to finance.

However, the report shows that, as well as improved awareness of private financial options available to manufacturers, there needs to be far greater awareness of the public sources of finance and Government schemes. More than two thirds of companies (67%) have not heard of the Horizon Europe programme, while a lack of awareness of domestic schemes such as the Government’s flagship management Help to Grow scheme (61%) and British Business Bank (58%) is also alarmingly high. By contrast, just 2% of companies have successfully accessed the Horizon programme, 14% accessed the Help to Grow scheme and 12% accessed the British Business Bank. According to Make UK, this means Government must be cautious before scrapping schemes that companies are unaware of.

A lack of awareness of Horizon Europe funding is especially concerning given Government’s recent efforts re-launch the scheme, especially as evidence between 2010 and 2022 showed grants from the scheme to manufacturers fuelled a 20% increase in employment and, a 30% increase in total assets by recipients.

To improve manufacturers’ awareness of the range of public and private finance available Make UK is calling for a centralised database which would signpost both public and private provision, a case supported by almost half (48%) of companies. Whilst this would require substantial resource, Make UK believes that the emergence of new technologies such as digital dashboards and AI should aid this task. According to Make UK, at the very least, a centralised system of exclusively public support could work in conjunction with the private sector and become a tool that lenders can use to advise manufacturers appropriately.

Sleepeezee, a UK bed manufacturer that built a reputation for its use of pocket spring interior mattresses, capitalised on the opportunities created when using finance to improve energy efficiency.

Steve Warren, Managing Director of Sleepeezee comments: “For any business to grow you need to be flexible and access to the right finance at the right time is crucial to enabling flexibility and quick response to market changes. At Sleepeezee we were looking to improve our energy efficiency. Finance helped us with the installation of nearly 600 solar panels that enabled us to cut carbon emissions and produce our own electricity.”