Manufacturing in 2025: innovation and drive sees the sector poised for growth

Posted on 30 Jan 2025 by The Manufacturer

Professor Mike Capaldi, Chair of Driving the Electric Revolution Industrialisation Centres (DER-IC) believes the UK manufacturing in 2025 is primed to bring agility and determination into a new era, with a raft of new growth opportunities.

The Driving the Electric Revolution Industrialisation Centres (DER-IC) are at the sharp end of the electrification journey. Manufacturers are looking to innovate when they come to teh centres’ open-access facilities to find new ways of doing things, optimise their processes, access new markets, to scale up or develop something entirely new. From many conversations with colleagues in the sector, these are three trends Mike believes will help shape manufacturing in 2025.

Sustainability within the Industrial Strategy

The new government’s Industrial Strategy, Invest 2035, provides a roadmap for the next decade. While policy changes can introduce uncertainty, they can also act as a call to arms for manufacturers to reimagine their operations and align with new market demands.

One of these demands will unsurprisingly be sustainability, a cornerstone of the Industrial Strategy. Targeting high-growth sectors such as advanced manufacturing and clean energy, the strategy focuses on breaking down barriers to innovation, encouraging collaboration and creating high-quality jobs.

Recognising the dual pressures of resource scarcity and our environmental responsibilities, DER-IC has been at the forefront of developing capabilities for recycling rare earth materials.

The University of Birmingham operates a pilot facility for recycling rare earth magnets using the innovative Hydrogen Processing of Magnet Scrap (HPMS) method. This cutting-edge equipment enables the recovery of up to 100kg of commercial-grade materials daily from end-of-life electronics. Funded by DER-IC through the UKRI’s Driving the Electric Revolution Challenge, delivered by Innovate UK, the plant exemplifies the UK’s drive toward sustainability, reducing reliance on imported materials and creating a scalable model for remanufacturing critical components to service domestic supply chains.

Similarly, advancements in lightweight materials and thermal management technologies have provided manufacturers with new tools to improve product performance while reducing waste. These efforts are not just ticking boxes for ESG reporting; they will create tangible benefits for businesses and the environment alike.

Securing the future of a UK-based semiconductor supply chains

We’ll continue to see advancements within the UK’s semiconductor sector which follows the positive trajectory of recent years.

Recapping the acceleration of the sector, in 2023 we saw the previous government launch a £1bn, 20-year National Semiconductor Strategy. This strategy promised to strengthen capabilities in compound semiconductors, R&D and design, enhancing supply chain resilience and economic growth.

Following this, in 2024 the UK established an independent Semiconductor Institute to coordinate efforts between academia, industry and government, fostering innovation and skills development. Innovate UK further bolstered the sector with £11.5m in funding for 16 projects focused on improving semiconductor manufacturing and supply chain resilience.

At the DER-IC and with the support of its partners, it is supporting UK semiconductor onshoring through cutting-edge facilities and collaboration. Key capabilities include advanced packaging, prototyping and process optimisation for silicon carbide (SiC) and compound semiconductors.

Facilities like The Centre for Integrative Semiconductor Materials (CISM) at Swansea University and CSconnected within DER-IC South West and Wales offer industrial pilot lines and cleanrooms, enabling high-reliability semiconductor packaging, die attachment and scalable manufacturing. DER-IC connects industry and academia, offering resources for design, testing and training to accelerate innovation while reducing risk. Through collaboration, favourable policy and investment in this space, the DER-IC are helping to develop a robust domestic supply chain with its development and scale-up capabilities.

Resilience amid financial pressures

Last year, the funding landscape in 2024 was one of the toughest hurdles for the sector. Many SMEs struggled to secure the investment needed to bring critical projects to fruition. Yet, despite these challenges, the industry remained steadfast. UK manufacturers collectively invested £38.8bn into the economy in 2024, a notable increase from 2023.

Now, 2025 brings opportunities to harness new investment models, innovative funding mechanisms and to capitalise on collaboration. DER-IC plans to continue to support SMEs and larger companies to overcome these financial pressures, providing commercial services or offering collaborative funding opportunities and practical solutions to optimise risk. By enabling access to cutting-edge equipment on a hire basis, SMEs struggling with cash flow and resource constraints can to continue to innovate. This model of shared resources has not only helped companies reduce costs but also accelerated their ability to innovate, removing the need for substantial upfront investment.

Collaboration is key to harnessing opportunity

Collaboration will always be one of the sector’s greatest strengths. Whether it’s SMEs pooling resources through initiatives like DER-IC or larger organisations partnering with universities to drive R&D.

DER-IC and its facilities will continue to play a pivotal role in these developments, including in advancing semiconductor capabilities—a critical area for the UK’s future competitiveness. Meanwhile, the emphasis on sustainability and digitalisation will only grow, as manufacturers strive to meet both regulatory requirements and consumer expectations.

While challenges undoubtedly remain, the sector’s trajectory is firmly upward, fuelled by the ingenuity and determination of the people and organisations that drive it forward.

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