2024 was yet another year of change and disruption for UK manufacturing. Alongside ongoing fluctuations around supply chain issues and skills and recruitment, there was of course, a change in government and the announcement of the Industrial Strategy. Here, the sector looks back on the year that was, and casts an eye forward on what to expect in 2025.
Now that the dust has settled and the new government has bedded in, it seems reaction to the long-awaited Industrial Strategy – and the plans laid out in the subsequent Budget – differ depending on who you speak to; or more specifically, the view from the SME community seems decidedly more sceptical.
More senior figures in the sector described the Industrial Strategy as: “A welcome first step in addressing the Achilles heel of the economy”, and the following Budget: “A clear path to growth for manufacturing with a number of positive measures.”
However, Steve Morley, President of the Confederation of British Metalforming (CBM), an organisation whose members predominantly come from the SME community, said: “All of the optimism following the election, and the promise of an Industrial Strategy, has been wiped away with the ill-thought-out Budget. The tax hikes forced on to businesses could have a devastating impact on SMEs, who are still grappling with the impact of inflation and energy prices far higher than their European counterparts.
“Going forward this now begs the question… can we trust Labour with the Industrial Strategy? It is one thing introducing one, but it’s the content that counts, especially for SMEs, who are constantly overlooked.”
In addition, Stephen Kelly, Chief Executive of ManufacturingNI, another organisation with strong links to SMEs added: “The UK’s Industrial Strategy is largely invisible to manufacturers in Northern Ireland. So, there’s a bit of work required from the UK government to explain why this is relevant to the devolved nations.
“In terms of the impressions of Northern Ireland’s manufacturers towards the new government, they’ve been negative so far – the rise to national living wage, and particularly the move on National Insurance, has added quite significant costs to businesses here.
“We’re no longer in a space where the jury is out on the UK government. I would say that there’s disappointment as a result of the Budget and what the UK government has done so far.”
Here, we gauge the view of the sector on these key issues, and on various other milestones of the year just gone. They also look ahead to 2025 and what’s in store for UK manufacturing.
As we enter 2025, the instability of the last few years at home and overseas shows little sign of abating. Given the shocks of the last few years manufacturers are now used to dealing with this as the new normal, impacting on their business in numerous ways from the de-risking of supply chains, the search for and, retention of, talent and the rapidly accelerating and transformational technologies such as AI and virtual reality.
Domestically, the new Labour government may have brought an end to the political chaos of the last few years of Conservative rule but despite the welcome enthusiasm of new government ministers, as far as manufacturers are concerned the jury is still very much out. While we have the promise of a long-awaited industrial strategy which Make UK surveys have consistently shown has the potential to generate long-term growth, the Autumn Budget brought the seismic shock of the substantial increases in National Insurance contributions.
Coming on top of the potential ‘Make Work Pay’ employment reforms and the increase in the National Living Wage, together with other costs from changes to Inheritance Tax and Capital Gains Tax companies are now facing a tsunami of government generated cost increases. Having spent many years dealing with the increases in energy costs, there is now a danger that the cumulative impact of these increases will damage the competitiveness of many companies at best and, may prove existential to the future of some at worst. As we ended 2024 Make UK’s latest economic survey showed business confidence dipping at the sharpest rate since the onset of the pandemic.
However, despite this the majority of manufacturers believe the UK is still a competitive place in which to manufacture and, as they have always done, the majority will adapt in time. Government can aid this by bringing forward its industrial strategy as soon as possible, while we still need to see substantial reforms to the broken Apprentice Levy.
A long-term industrial strategy is crucial at this point in time, if we get it right we can create 100,000’s of jobs in new manufacturing sectors around the net zero transition, but central to this being deliverable will be a comprehensive step change in creating the technical skills we so desperately need.
Initiatives such as Made Smarter are crucial to the digital transformation of many companies, especially SMEs, and Make UK surveys optimistically show that improving productivity, investing in energy efficiency and automation, together with entering new markets are at the top of manufacturers’ wish lists for 2025.
Looking ahead, the next twelve months will bring both opportunities and new challenges for manufacturers. A new US President is bound to bring challenges with the threat of tariffs and a trade war, while the disruption to sectors such as Automotive and wider issues from the transition to net zero will provoke continued debate among business and the public. Despite these challenges, as ever, I remain optimistic about the contribution of manufacturing to address the many societal challenges we face that will place the sector ever more closely at the heart of the economy. It is more critical than ever that we work closely with this government to ensure the right outcomes for UK manufacturing.
Each of the last few years I have taken time to reflect on the major trends and challenges the industry has experienced and share my perspective on how these forces will evolve and what new strategies or approaches these dynamics will motivate across industries in the coming year(s). Last year I examined how the major industrial pressures had shifted and the effects these pressures would have on companies in 2024.
In 2024 we have seen many of these pressures continue. The complexity of products, manufacturing processes, and supply chains continues to increase, especially as advanced electronics and software account for a greater proportion of product functionality. The growth in complexity across multiple areas is made more pressing by an acceleration in product development cycles across industries as companies seek competitive edges through innovation. Meanwhile, new sustainability regulations and intense competition for workers with certain key skills further complicate the task of guiding a business through these pressures.
As companies focus on managing each of these pressures, the industrial landscape can appear chaotic. Many companies have responded to this chaotic landscape in a disorganised manner. The first reaction has most often been to seek out digital tools to gain advantages in product development, production design and operation, management of information, supply chain dynamics, and more. But these adoptions have often been piecemeal or uncoordinated. While these tools can offer benefits in isolation, their true transformation advantages cannot be unlocked without a broader strategy. Moreover, digital transformation takes more than expanding one’s digital toolbox.
Looking ahead to 2025, I’d like to refocus on the fundamental reasons why companies should pursue digital transformation and explore the full scope of what digital transformation entails. For the coming year and beyond, it will be critical to remember that tools are not enough in the absence of appropriate processes and talented people with ample support.
Read Dale’s full article on A holistic approach to digital business transformation in 2025.
We are in extraordinary times heading into 2025, and these times call for an exceptional group of businesses to step up and make a difference and deliver the growth the country needs. Manufacturing is the vital sector for delivering sustainable growth and the Made in Britain trademark represents and unites more than 2,100 proud British makers. This includes hundreds of household names from across sectors such as defence, construction products and advanced engineering.
The sector has been forced to cope with a series of unprecedented challenges in recent years, and 2024 was no exception. The arrival of a new government and its fresh approach to industrial planning was welcome news. But changes to national insurance in the Budget announcement soon smothered the early optimism around investment and better focus on our sector. With growth the government’s top priority, a long-term ‘materials, machinery and more skilled makers’ approach really is the only way to build the resilient and versatile base needed for making the goods that will drive a cleaner, greener and growing economy.
November 2024 saw us celebrating manufacturers with the Made in Britain Impact Awards, which took place as an in-person event for the first time. With over 170 attendees representing manufacturers from across the UK, the event proved a massive success – in social media wins and with in-person feedback from finalists. Awards were presented across eight categories, truly celebrating the breadth of British manufacturing to champion its legacy and its prosperous future. The Impact Awards will return in 2025, once again as an in-person event, and once again celebrating the best of British manufacturing.
Made in Britain will also be bringing its members together in 2025, through regular in-person networking opportunities allowing members to meet their peers, share ideas and discover new business opportunities with the UK supply chain. We are also expanding our programme of events on supply chain resilience and export growth across the year. Crucially, we will continue to help our members to truly benefit from the official Made in Britain trademark so their business can take full advantage of and celebrate their status as a certified UK manufacturer.
As 2025 approaches, it’s clear that the old-school manufacturing playbook is dead weight. The industry’s slow adaptation to new tech and comfort in outdated practices isn’t cutting it anymore.
Labour shortages, productivity problems and a constantly shifting political climate are just the start. If manufacturers want to stay in the game, they can’t keep dragging their feet – they need to get serious about innovation, now.
2024 showed us how many manufacturers are still stuck in the past, relying on legacy solutions while missing out on the real power of automation and advanced tech. Sure, some of the latest tools are still in their infancy, but waiting to embrace them is a mistake. To stay relevant and meet future demands, manufacturers need to start adopting these tools yesterday, even if they’re just dipping their toes in.
2024 showed us how many manufacturers are still stuck in the past, relying on legacy solutions while missing out on the real power of automation and advanced tech. Sure, some of the latest tools are still in their infancy, but waiting to embrace them is a mistake. To stay relevant and meet future demands, manufacturers need to start adopting these tools yesterday, even if they’re just dipping their toes in.
Productivity and quality control remained top issues in 2024, highlighted by high-profile cases like Boeing’s quality control mishaps. This reflects a broader challenge across the manufacturing sector, as many companies, regardless of size, lack systems to identify and address errors, defects and mistakes as they happen on the assembly line. Without stronger government regulatory oversight, the manufacturing industry may continue to struggle with systemic quality control challenges. This is all the more reason to embrace digital adoption. The longer they hold off implementing basic tools, the more they risk wasting time and money – or civilian lives.
Labour shortages also plagued manufacturing the past year, threatening productivity and profitability. While manufacturing jobs have reportedly rebounded to pre-pandemic levels, skilled labour remains difficult to attract and retain. Gen Z employees, the emerging majority workforce demographic, are looking for roles that offer digitally centred, engaging, and modern work environments that provide opportunities for growth. A 2023 Deloitte survey found that 60% of Gen Z want to work for companies with progressive, digital-first cultures. The manufacturing sector, still stuck in its analogue past, faces an existential crisis now that its pinnacle Baby Boomer workforce begins to retire and Gen Zs lack interest in a career in manufacturing.
To fix this, manufacturers need to overhaul their workspaces, embrace digital tools, and rethink their training programmes. Traditional, paper-based operations aren’t going to cut it anymore – Gen Z expects digital, interactive training that mirrors their everyday experiences with technology. To be successful, training initiatives must integrate user-friendly, digital technologies such as videos, touch screens and real-time task guidance. These tools not only enhance learning but align with the digital tools Gen Z uses daily. If manufacturers don’t get this right, they’ll be stuck with an ageing workforce, or, eventually, no workforce.
Millennials and Gen Z not only expect modern, tech-driven work environments but also prioritise sustainability, seeking to work for companies that demonstrate strong environmental and social commitments. This shift in priorities aligns perfectly with the values of millennials and Gen Zs, who are increasingly stepping into leadership roles. They’re digital natives, and they’ll drive faster adoption of new tools. The speed of change might not be predictable, but it’s coming. Manufacturers who don’t keep up will get left behind.
The manufacturing sector’s success depends on its ability to evolve. As costs of outdated practices rise, competitors in other industries leverage digital innovations to boost efficiency and profitability. To stay competitive globally, manufacturing must adopt modern tools, enhance work environments, and provide effective training to build a skilled, resilient workforce.
As 2025 approaches, it’s time for manufacturers to recognise that the industry’s traditionally cautious pace is no longer an option. If the sector wants to thrive in an increasingly digital world, it must prioritise change now. By fostering a culture of innovation, improving quality control, and addressing labour challenges with modern solutions, manufacturers can secure their place in a fast-moving global economy. The pace of change may be influenced by political and generational shifts, but one truth remains: the future of manufacturing depends on the industry’s willingness to evolve.
Post-Quantum Cryptography will spotlight crypto agility: Earlier this year, NIST released its first sets of post-quantum encryption algorithms. Before these standards were released, many enterprises needed help grasping the need for PQC. NIST’s standards have brought urgency to address the impact of quantum advancements and the need to address these threats. Even though the TLS and SSH protocols have been updated to meet NIST’s new standards, NIST is already working on its next set of algorithms, meaning that the algorithms implemented today will be different by the time the threat of quantum computing arrives. This points to the importance of crypto agility in adapting to these evolving security recommendations.
While TLS and SSH protocols are being updated to meet NIST’s standards, enterprises will need to embrace crypto agility in 2025. The biggest barrier will be ensuring they have the time and resources to identify their exposure, take inventory of their assets, and employ crypto discovery. This will manifest in a steady rise of crypto centers of excellence among major enterprises. Enterprises must place agility at the centre of their quantum readiness, ensuring crypto-agile solutions are leveraged to keep pace with emerging quantum-resistant cryptography.
Companies will proactively embrace compliance: With the acceleration of cyber attacks, in the global context of the digital transformation of society and the fast adoption of cloud services or AI technologies by organisations, nation states are taking steps to regulate the digital space better. They adapt their compliance frameworks to formalise and enforce the responsibility of companies over their digital assets (workload, data, identities) and business resilience.
The cyber security landscape in 2025 will see a shift from reactive to proactive measures. Continuous monitoring and getting ahead of potential threats will become standard practice, along with more robust authentication measures. Compliance with new regulations such as NIS2, DORA, PCI 4.0, the UK Cyber Resilience Act, and the EU AI Act will be crucial. We will see some companies move to handle their data on-premises as a result, necessitating the same stringent security postures as cloud environments.
2024 has been a year of uncertainty and trepidation for many. The quickly announced UK election, the Budget, the US election, and throughout all of that, international conflicts continuing, and in some cases, escalating.
All have contributed to a cauldron of concern impacting decision making within many sectors of the industry.
Like many, we’ve tried to focus on what we can control and not let the negativity or noise impact what we do. We’ve focused on doing what we do best, being the best, not the biggest, and delivering the very best levels of service and competitiveness to our customers.
Thankfully, as a result, it’s been a steady and good year, but not the year of promise and major growth we’d originally hoped and planned for.
With the new government coming in, and their well-publicised commitments to growth and the promotion of UK manufacturing, there was real hope of a change in focus and a more stable and buoyant business environment. But many have seen the Budget NI announcements as the government “pulling the rug from under UK manufacturing” and are struggling to see where the promised growth will come from. However, there are others who believe the budget and Labour’s strategy will deliver the growth promised.
As businesses, all we can do is respond accordingly to the cost increases and employment pressures we’re facing and prepare for the opportunities potentially to come. Many customers are saying order books and volumes are sounding positive for 2025, but the signature isn’t on the dotted line…. yet! Hopefully, when this proverbial cork pops, we’re all in a position where we’re able to maximise the opportunities and grow with them, rather than having to turn them away due to a lack of skills, capacity or infrastructure.
AI will revolutionise UK and European manufacturing and logistics, boosting efficiency and competitiveness, by merging OT with IT and leveraging real-time data for new levels of operational excellence.
UK and European manufacturing will transform by integrating automation and AI, boosting competitiveness. Historically slow to adopt new tech, manufacturers will now invest heavily in merging operational technology (OT) with information technology (IT). Wireless systems and edge servers will secure and process data in real time, essential for effective automation planning.
Logistics will also embrace these technologies, with data becoming crucial due to high volumes and low margins. Automation will enhance speed and margins, while AI will optimise order management, truck guidance and scheduling. This will enable every supply chain stage to be meticulously planned for efficiency.
The convergence of automation and AI will streamline operations, creating a resilient and responsive landscape. By harnessing data, automation and AI, manufacturing and logistics sectors will achieve new levels of efficiency and competitiveness, driving sustained growth in a rapidly evolving market.
Advanced communication networks and private 5G technology will help manufacturers achieve sustainability goals by optimising energy use and integrating renewables.
Manufacturing will leverage advanced communication networks to achieve sustainability goals. These networks will not only enhance efficiency and speed but also reduce waste and optimise energy use. By monitoring and improving energy consumption across high-demand assets, manufacturers can significantly reduce their carbon footprint. Avoiding unnecessary energy use, such as machines left on standby, will be a critical strategy.
The growing demand for energy to power advanced AI technology necessitates a shift towards renewable energy sources. Enterprises, especially manufacturers with available space, can integrate renewables like solar panels to supplement their energy needs and decrease dependence on traditional sources. Additionally, robust communication networks will be crucial for effectively managing the storage and distribution of renewable energy, ensuring a consistent and sustainable power supply.
The adoption of private 5G technology will further support these efforts by providing real-time data and insights. This will enable manufacturers to make informed decisions about energy use and sustainability practices. Embracing these technologies will help the manufacturing sector not only meet sustainability objectives, but also enhance operational efficiency and resilience.
Manufacturers will tackle supply chain disruptions by integrating AI and emerging technologies, enhancing sustainability through re-shoring and near-shoring, and leveraging advanced tech in free zones for efficient operations.
In 2025, manufacturers will continue tackling supply chain disruptions by integrating AI and emerging technologies. Re-shoring and near-shoring will become prominent strategies, enhancing sustainability and boosting local economies. By bringing production closer to home, manufacturers will reduce dependency on distant suppliers and create opportunities for local reinvestment.
For unavoidable international supply chains, qualifying manufacturers may shift operations to free zones, including the new UK freeports. These zones will benefit from significant investments in advanced technologies, enabling efficient and smooth operations. Blockchain and other tracking technologies will be pivotal in maintaining transparency and security in the movement of goods across borders.
AI will play a crucial role in optimising supply chain processes. By analysing data and calculating the most effective turnaround techniques, AI will help manufacturers improve margins and capture new market share. This integration of AI and technology will help to create a resilient supply chain capable of adapting to disruptions and maintaining operational continuity.
IoT, AI and digital tools will revolutionise manufacturing by enhancing production processes, boosting workforce efficiency, and providing increased supply chain visibility.
The manufacturing sector will harness IoT, AI, and digital tools to revolutionise production processes and workforce efficiency. Historically, the adoption of IoT faced challenges due to complex and proprietary protocols. However, the advent of carrier-grade private 5G will overcome these barriers, enabling seamless data collection from multiple sources. This data will be crucial for refining production, reducing waste, and streamlining processes.
AI will play a pivotal role in enhancing workforce productivity and safety. By analysing real-time data, AI systems will optimise workflows, predict maintenance needs, and promote safe working conditions. This will not only boost efficiency but also help to create a safer and more productive work environment.
Enhanced supply chain visibility will be a game changer. With IoT and digital tools, manufacturers will track everything as it moves through and between locations. This visibility will support just-in-time manufacturing, so that production is not only timely but also cost-effective. The integration of these technologies will lead to a more agile, efficient, and resilient manufacturing sector.
You can’t reflect on 2024 without talking about the General Election. We’ve been closely monitoring how the new government will impact the UK’s largest manufacturing industry, food and drink, and it’s been gratifying to see them acknowledge the importance of our sector to the nation. This includes advanced manufacturers, such as our members, being included as a priority sector within the new Industrial Strategy, as well as the upcoming cross-departmental Food Strategy.
We need an integrated approach across government and industry to look at sustainability, health, investment and growth. This will support our long-term food security and ensure we’re able to continue providing affordable, healthy and safe food for the nation. The next 12 months will be pivotal for both of these strategies as they take shape, so we’ll be working closely with government over 2025 to ensure industry’s voice is heard.
A major focus for food and drink manufacturers in 2025 will be the introduction of Extended Producer Responsibility (EPR) regulations in October. These new packaging regulations offer a once in a generation opportunity for the UK to develop a world-class recycling system and create a truly circular economy. This will mean that shoppers can be confident that when they dispose of their crisp packets, yoghurt pots and bread bags, they will be responsibly recycled and turned back into food grade packaging. However, we expect EPR to cost manufacturers £1.4bn in the first year alone, so we need to ensure this money actually delivers for the UK. A key part of this will be ensuring that food and drink businesses have visibility as soon as possible of the specific costs they’ll be paying when the regulation comes into force in October.
Our recent State of Industry report showed signs of positivity for food and drink manufacturing, with business confidence steady and 40% of manufacturers planning to make investments. However, more than half of our members were also concerned about the impact of upcoming legislation. With EPR, National Insurance employer contribution changes and minimum wage increases all adding billions of pounds in additional costs for UK food and drink manufacturers, we need government to double down on its growth mission in 2025. Recent FDF research has highlighted that our industry has a £14bn growth opportunity for the taking – by investing in technology we can grasp this opportunity and be more productive, drive innovation and help keep costs down for shoppers. But, this can only be achieved if government creates the right conditions for this growth.
The past 12 months have once again demonstrated how important manufacturing is to the UK’s economic growth. According to the latest figures, the sector supports 2.6 million jobs, contributes £217bn GVA to the economy each year and accounts for 45% of UK exports.
In 2024, the Hydrogen Innovation Initiative (HII), led by HVM Catapult, outlined the role hydrogen can play as a driver for that growth in the UK Hydrogen Innovation Opportunity report.
As we move into 2025, HVM Catapult stands ready to support the UK government’s industrial strategy. Our network of centres will work alongside industry, government and academia, supported by Innovate UK, to tackle key objectives in support of net zero, healthy living and national security.
A new Industrial Strategy will help manufacturers scale-up their supply chains, unlock private investment, transform their approach to skills and harness disruptive technologies such as automation and robotics.
As 2024 draws to a close and we reflect on a year of global change, the UK manufacturing sector has continued to show resilience and its capacity for innovation and agility. The funding landscape in 2024 proved to be one of the toughest hurdles for the sector. Yet, despite these challenges, the industry has remained steadfast. UK manufacturers collectively invested £38.8bn into the economy, a notable increase from 2023.
A change in government brought new policies where the hope is opportunities will be created. 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.
The UK has advanced its semiconductor sector with strategic investments and policy developments. In 2023, the government launched a £1bn, 20-year National Semiconductor Strategy to strengthen capabilities in compound semiconductors, R&D and design, enhancing supply chain resilience and economic growth.
In 2025, the sector feels poised to capitalise on several exciting opportunities. Emerging technologies such as wide-bandgap semiconductors, advanced recycling methods, and lightweight composites are set to revolutionise manufacturing processes. At the same time, the growing focus on onshore capabilities promises to reduce reliance on international supply chains, enhancing resilience and security.
DER-IC and our 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.
As we close the chapter on 2024, one thing is clear: the story of UK manufacturing is one of continued optimism. 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.
While CCEP is a global brand, we’re proud to have been making soft drinks locally in GB for over 100 years. Today, 97% of our products are made in GB, and we’re always looking to how new and emerging technologies can help our local manufacturing sites operate more efficiently and sustainably.
In 2024, we announced a planned £42.3m investment in a new Automated Storage Retrieval System (ASRS) warehouse at our Wakefield site, which is Europe’s largest soft drinks plant by volume. The new ASRS will take two and half years to build and will increase warehouse capacity at the site by more than 29,000 pallets. It will also a deliver a reduction of 18,500 vehicle journeys per year from the road network, equating to 441,000 km per year.
Backed by £103 million invested into the site since 2019, we have also increased use of automated guided forklifts and autonomous electric trucks, which not only boost efficiency but also reduce our carbon footprint across our production and warehouse operations.
Sustainable packaging plays an important role in the circular economy. As manufacturers, we need to consider solutions that will effectively influence and change consumer behaviour.
Our sustainability action plan, This is Forward supports The Coca-Cola Company’s global sustainability ambitions and we’re making good progress as we continue to work with suppliers, partners and customers to transition to a net zero economy.
We have continued to innovate our packaging with the aim of helping reduce waste and simplify the recycling process. At the beginning of this year, we trialled the removal of labels on some Sprite and Sprite Zero on-the-go bottles to reduce the volume of packaging materials. By the end of 2025, all of our can multipacks of 10 or fewer will also have converted from shrink to cardboard outers.
As we enter 2025, conversations around the upcoming Deposit Return Scheme (DRS) in England and Scotland will only increase. We have been long-time supporters of the introduction of a well-designed DRS to boost recycling of drinks containers and reduce litter.
It’s our belief that a well-designed DRS will play a crucial role in influencing consumer behaviour and ultimately increase recycling rates. The past 12 months have continued to show the positive impact these schemes can have, with the Republic of Ireland joining the 40 countries that are successfully implementing it.
What needs to happen in 2025 and beyond is for thinking to evolve through testing and learning initiatives, and for businesses and the government to work together in order to implement a successful DRS in England and Scotland in 2027.
This year has seen significant momentum in the push for clean and efficient energy systems, policymakers and business leaders continue to prioritise sustainable solutions.
Notably, the Labour Party has laid the groundwork for GB Energy, a proposed publicly owned energy company that aims to transform the UK’s energy landscape through substantial investment in renewable energy sources. It marks an important step in aligning national policy with the pressing need for greener energy alternatives.
As we move into 2025, I am optimistic that the drive for renewable and solar energy will remain a priority, alongside continued progress in transitioning from diesel to hydrotreated vegetable oil (HVO). These shifts are essential for achieving both environmental targets and energy resilience.
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