UK manufacturing industry optimistic despite challenges. Have they affected your company?

FRP recently released its ‘Manufacturing Agenda’, a report on the factors driving board-level decisions in the UK manufacturing sector.

The report is based on a survey of more than 1,000 decision makers in the UK manufacturing sector, including SMEs and large corporates, and 108 UK-based lenders and investors serving manufacturing clients. Its perspectives offer a unique insight into the dynamic, fast-growing and changing British industry.

While the report contains a sense of optimism for next year, that optimism may be hard to appreciate if you’re a director of a manufacturing company that’s struggling to manage its financial issues, or creditor pressure is hindering your daily operations.

The following highlights some of the key themes from the report and considers what they may mean if you’re a director of a manufacturing company.

You can read the report in full on FRP’s website

Can your manufacturing company navigate finance and funding constraints?

Accessing funding is a challenge across the sector, which the government aims to address in the Industrial Strategy; a 10-year plan to increase business investment and grow UK industries. This includes £4.3bn in funding and £2.8bn in R&D programmes. It’s hoped these measures will spur innovation, automation, digitisation and commercialisation.

How many sector leaders struggled to secure funding:

• 99% of manufacturers interviewed said they’d had trouble securing funding
• 26% said those constraints had significantly impacted their operations or growth
• An additional 45% cited noticeable challenges in securing new lending or refinancing
• 28% experienced some tightening to funding availability, but they were still manageable within existing facilities

This sentiment suggests lenders aren’t completely withholding funding from manufacturers but are instead being more selective with who they grant it to.

Among the manufacturing firms interviewed, there are several reasons they faced challenges around accessing funding:

• 30% cited lenders tightening credit appetite in manufacturing
• 29% cited concerns around business performance
• 28% cited HMRC-related issues
• 27% had seen a reduction in government support, or refinancing their COVID-related schemes. The same number had seen an increase in borrowing costs
• 25% cited insufficient collateral or security
• 24% cited hurdles with compliance and regulation, or ESG

The lenders and investors had their own reasons for withholding funding:

• 31% cited sector-specific risks
• 30% cited valuation expectations of owners
• 25% cited regulatory or policy uncertainty
• 22% availability and quality of management
• 21% cited macroeconomic uncertainty, including inflation
• 19% cited limited attractive opportunities, differing priorities of internal capital allocation, or poor data and reporting from those applying

While the report states that providing strong forecasting and a strong central message could improve chances of receiving funding, that could be little comfort if your firm has already been denied funding or you’re struggling to manage your company’s finances with the capital available.

Speak to us if your company is struggling with an imbalanced cashflow or you’re experiencing difficulties with funding. Our licensed and regulated insolvency practitioners can assess your company’s situation and advise on the option best suited to your circumstances.

How much will adaptation and investment cost your company?

Adaptation is crucial for manufacturing firms to remain viable and to stay in line with competitors, and across the sector, companies continue to invest to improve productivity, competitiveness, and efficiency.

How companies have invested in growth and resilience:

• 23% of those surveyed had made changes to their leadership or succession plans
• 24% had refinanced or recapitalised
• 28% had undergone some form of restructuring or cost reduction measures
• 29% invested in new technology or R&D

However, the cost of investment can be prohibitively expensive, especially if it involves investing in new technologies like automation and AI, or updating machinery or equipment to meet modern standards.

Additionally, when asked whether that funding had led to any improvements:

• Only 43% of the companies reported material improvements
• Only 26% said the investment had been transformational

These figures show that investing and modernising don’t automatically guarantee success.

Your company could be eligible for one of several finance options that could allow your business to invest and grow without further damaging your cash flow.

The sector remains confident and decisive, despite a volatile economy

Despite the challenges and unpredictability plaguing the sector and the wider economy, there is optimism in the sector.

• 69% of the manufacturers said they felt confident about 2026

That confidence seemed to correlate with those with clear plans to build resilience in their supply chains, plans for automation, or implementing Environmental, Social, and Governance (ESG) principles.

While overall, the sector may have an optimistic view of the future, if you’re the director of a manufacturing firm struggling to repay your company’s liabilities, that confidence may feel detached and hard to appreciate if you’re struggling to manage daily operations and dealing with creditor pressure.

How we can help

If your manufacturing company is experiencing financial challenges and you’re concerned about its future, speak to us.

We can offer free, impartial, confidential advice with no obligation, and our licensed insolvency practitioners can carry out several formal insolvency proceedings. By acting quickly, you give yourself a better opportunity of achieving the best possible outcome.

Depending on your situation, we can explore options such as:

• Repay your company’s debts in a Company Voluntary Arrangement (CVA)
  A CVA is a payment plan between your company and its creditors that allows you to repay an affordable portion of your company’s unsecured debts, including contractors and suppliers, over a fixed period while trading continues. All interest and charges are suspended, and creditors cannot take further legal action.
  More on Company Voluntary Arrangements (CVAs)
• Restructure and stabilise your company through administration
  Administration is an insolvency procedure for companies, putting it in a temporary state of protection by a moratorium that halts creditor action and gives your company the breathing space to continue trading, potentially including production. Its main purpose is to rescue your company as a going concern, attempting to restructure and turn it into a leaner, more profitable organisation.
  More on administration
• Close your insolvent company via a Creditors Voluntary Liquidation (CVL)
  A CVL will formally close and liquidate your insolvent company, ceasing its trading operations, stopping production, realising any assets, and removing the threat of creditor legal action. Once completed, your company’s unsecured debt will be written off, and the company is dissolved, allowing you, the director, to move on.
  More on Creditors Voluntary Liquidations (CVLs)
• Close your company and start again in a pre-pack liquidation
  A pre-pack liquidation is a type of liquidation wherein the sale of your company’s assets is arranged before closure, allowing operations to continue under the purchasing company. The company name may be reused, and employees can transfer under TUPE. Contracts and essential agreements can also be included as part of the sale, ensuring minimal disruption to your business operations. This process eliminates the unsecured debts of your previous company.
  More on pre-pack liquidation

In summary

FRP’s recently released Manufacturing Agenda set out a positive outlook for the sector’s immediate future, even with the possible sector-specific and wider economic challenges. Despite this optimism, directors of firms currently struggling or who’ll need to adapt to stay competitive might struggle to share in that positivity. Contact us if you’re concerned about your manufacturing company’s future. We can advise you of the best route forward.