“Once-in-a-generation” shocks have become business as usual for UK manufacturers.
Since the turn of the decade, the operating environment has been especially turbulent. In 2021, the UK was enduring the pandemic-induced labor crisis, when the country formally exited the EU customs union, introducing new trade barriers. Soon after, Russia’s invasion of Ukraine led to energy price spikes—as well as disruption to raw material supplies—then a series of conflicts in the Middle East impacted maritime routes. The on-off US import tariffs have only compounded matters.
Firms working in energy-intensive areas such as chemicals have been hit particularly hard, but the UK manufacturing sector as a whole has demonstrated remarkable resilience. In 2025, the UK was the 11th largest manufacturing economy globally. Since then it has been modestly growing, with activity hitting a four-year high in May 2026, although momentum has eased slightly following this peak.
This is partly the result of buoyant demand in key subsectors, such as areas that service defense and aerospace. The latter has performed particularly well, with turnover growing 24 percent from 2014 to 2024, cementing the UK’s aerospace industry as the second largest in the world.
It’s also the result of the speed at which manufacturers have adapted to uncertainty with a range of shockproofing measures. Given that the commercial headwinds are unlikely to let up, this is only going to become more important. We asked industry leaders for their takes on three essential strategies for manufacturers looking to build resilience...
The challenges of the past five years have demonstrated how interconnected and fragile the manufacturing ecosystem is. De-risking supply chains is one of the most important steps a business can take. This might include:
● Blended sourcing. To hedge against interruptions or shortages, firms can combine a mix of sourcing tactics such as long-term agreements, nearshoring and “friendshoring”, and even vertical integration.
This is the approach that hydrogen generator company GeoPura has taken. “Our biggest concern has always been the supply of hydrogen,” says Matt Barney, the company’s chief hydrogen business officer. “Is it going to be resilient and grow at a pace that matches our need? To de-risk that, we became a producer ourselves. But we’re also working collaboratively with other producers, being transparent in our need for hydrogen, and looking to build long-term contract relationships so they can have that confidence to invest in their own infrastructure.”
● AI risk analysis. Technology can help monitor supplier performance, enabling firms to identify weak links and undertake mitigating actions. It can also be used to enhance efficiency throughout the supply chain.
“We buy from 24 suppliers in the UK who procure raw materials from many different countries,” says Aniruddha Sharma, CEO of UK-based carbon capture company Carbon Clean. “And one of the key pieces of work is using AI to determine what changes we could make to our construction materials so that we reduce costs, reduce weight, and improve the resilience of the supply chain.”
● Greater collaboration. The whole manufacturing ecosystem can make more of a concerted effort to ensure every stakeholder throughout the supply chain is supported, improving overall durability. For larger firms, this might mean nurturing some of their smaller, specialist suppliers.
“We’ve been extremely deliberate in helping suppliers develop their own businesses,” says Sharma. “Not just through financial support, but also by discussing how they can scale up production or recruitment, and by introducing them to new international markets and potential supply routes. The suppliers become more resilient and robust because they've diversified, and their costs come down because they’re continuously producing, all of which benefits us.”
Competing on a traditional, single-product business model creates operational risk. To mitigate that, manufacturers are adapting their commercial strategies. Two common tactics are:
● Servitization. Research from Aston University provides compelling evidence that servitization—the wrapping around or combining of services with a core product—can increase competitiveness and deliver financial gains. The report states that for every one percent increase in the share of revenue earned from services rather than products, firms enjoy total revenue growth of more than two percent.
Rolls-Royce’s pioneering “power by the hour” model for jet engines is perhaps the most high-profile example of the strategy, but we’re likely to see more smaller firms become servitized manufacturers. “I think it's almost inevitable that if you're manufacturing in Britain you need to adopt some broader value,” says Jim Davison, national membership director of Make UK. “Because if you're just producing widgets at price, somebody else is always going to be cheaper.”
Carbon Clean is an example of a firm making this shift. “About 80 percent of our business model is to sell the technology inside a box and service it periodically,” says Sharma, “but we’re now moving towards a service offering that we call ‘carbon management as a service’. Most of our customers, whether they’re a steel producer or a data center, don't want to know anything about carbon emissions—they just want it managed for them.”
● Diversification. High-profile cyber-attacks have demonstrated the risk to suppliers who are too reliant on creating parts for a single product or customer. And broadening the customer base isn’t just a defensive measure: 55 percent of businesses identify diversifying their product and sector portfolios as their leading opportunity for growth.
This has led GeoPura to a new focus on defense. “Our whole business model is based around targeting areas with weak grid supply, where we can compete with diesel generators,” says Barney. “We didn’t set out to serve defense, but it’s been a natural pivot.”
The skills shortage is one of the biggest limiters to growth. In 2025, around 76 percent of employers of engineering and technology staff reported difficulties recruiting personnel with required competencies, particularly in sustainability and complex problem solving—areas that will be essential to long-term competitiveness. Alongside traditional training and upskilling programs, two tactics manufacturers may wish to explore for addressing this issue are:
● Tapping into skills ecosystems. “A key success factor in our partnership with Siemens in Newcastle has been the workforce,” says Barney. “It's quite remarkable the passion that there is from the local employees in Newcastle. In turn, Siemens is very committed to seeing growth in the area, and this has led to an apprenticeship program that we’ve developed together.”
● Cross-sector talent acquisition. It may also be possible to tap into talent pools in adjacent industries. “There’s a huge opportunity for the UK with the transition away from oil and gas,” says Sharma. “People from that sector could be retrained to work in net zero industries—they have a lot of synergistic, transferable skills, and experience, like process engineering, electrical and mechanical engineering, and rotating equipment.”
Read our full report on UK manufacturing, covering the current situation, future outlook and more here: