25 June, 2024

Manufacturers missing out on £10bn investment potential

20 May, 2024

A recent survey conducted by Make UK in collaboration with NatWest has uncovered significant untapped investment potential within the manufacturing sector, highlighting both challenges and opportunities for industry players. The findings suggest that improving financial awareness among manufacturers could lead to a substantial increase in investment, potentially boosting the sector’s overall investment potential by up to a fifth over the next twelve months.

According to the report, more than a quarter of companies surveyed indicated that they would increase their investment by up to a fifth if access to finance was improved, while an additional 12% expressed willingness to increase their investment by up to half. Key areas identified for potential investment include capital equipment, automation, energy efficiency, and cybersecurity, all of which are essential for the UK’s long-term productivity and competitiveness

Despite the potential benefits of increased investment, the survey also revealed persistent barriers to finance. Over half of the companies surveyed were unaware of the range of public sources of finance and government schemes tailored towards manufacturers. Economic and political uncertainty, along with the threat of increased costs, further deterred manufacturers from accessing finance in the next two years.

Fhaheen Khan, Senior Economist at Make UK, emphasised the critical role of access to finance in driving manufacturing investment. Khan likened access to finance to fuel for manufacturers, essential for continuous investments in capacity and innovation. However, Khan noted that significant investment opportunities were being missed due to a lack of awareness among companies of available finance options.

Laura Capper, Head of Manufacturing and Construction at NatWest, echoed Khan’s sentiments, emphasising the importance of finance in supporting manufacturers’ growth, innovation, and sustainability efforts. Capper highlighted the need for greater collaboration between manufacturers, lenders, and other key stakeholders to provide flexible funding solutions and ensure future financial stability.

The report estimates that unlocking manufacturers’ investment potential through access to private and public sources of finance could be worth £9.2bn in the next twelve months alone. This would be in addition to the annual investments in capital equipment and research and development (R&D), which amount to £33bn and £19bn, respectively.

To address the lack of awareness surrounding finance options, Make UK is calling for the establishment of a centralised database that would signpost both public and private provision. Such a database, supported by nearly half of the companies surveyed, could help streamline access to finance and support manufacturers in their growth ambitions.

Steve Warren, Managing Director of Sleepeezee, a UK bed manufacturer, shared his company’s experience of using finance to improve energy efficiency. Warren emphasised the importance of flexibility and access to the right finance at the right time in enabling growth and innovation within the manufacturing sector.

As the manufacturing industry seeks to overcome financial barriers and unlock its full potential, collaboration between stakeholders and greater awareness of available finance options will be crucial in driving future investment and growth



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