Manufacturing and engineering is still a lynchpin of the Black Country and UK economy
· Posted on: July 8th 2025 · read
It is evident that manufacturing and engineering is still a lynchpin of the Black Country and UK economy, with over 10% of the West Midlands employed in the manufacturing sector and 8% nationally.
It is a sector that is crying out for wider support to help propel the industry forward, to be more competitive, and increase productivity.
The economic climate and policy changes have arguably impacted on the manufacturing sector more than any other sector in the past five years.
The drop off in manufacturing contribution to GDP in the past 35 years from 17% to nearer to 9% along with the UK no longer being one of the Top 10 manufacturing nations globally, the need for a lasting industrial strategy needs to be implemented and followed through with regardless of the presiding government.
Policy directives on areas such as encouragement of foreign investment, skills and talent, connectivity and infrastructure, access to finance and R&D are vital to support the sector moving forward.
Despite the challenges from Covid to tariff uncertainty, manufacturing is an industry confident in its ability to grow over the next 12 months with over 20% of manufacturers expecting more than 6% in the next year. It’s pleasing to see so many West Midlands businesses confident in their growth.
The impact of national insurance increases, alongside the increase of minimum wage, have eaten into may businesses margins. The ripple effect is seeing businesses holding off on further investments while they assess the effect of the tax increases and how much they might pass on to customers. More companies are actively looking for grant and funding opportunities as a result to continue their growth ambitions.
Skills and talent retention and recruitment are a constant cause of corner for employers in the sector. More work can be done at an earlier age to promote manufacturing as a desirable sector to work in with a wider variety of career opportunities. Greater cohesion from the education sector is required to ensure relevant skills are being taught and keep up with an evolving sector.
Given the data in the report, it is pleasing to see how manufacturers are investing more in R&D to grow. Despite SMEs being more significantly affected by R&D rule changes, investments on process improvement and new product development lay clear groundwork for this size of business to meet their growth aspirations.
As digitalization becomes more prevalent in manufacturing, it is clear why technology and cyber security and two of the main challenges in the sector. There are practical and innovative ways for businesses to improve these areas such as implementing new IT systems that are bespoke to the needs of the business, investments in AI, and upskilling and recruiting staff to apply new technology.
Greater cohesion from the education sector is required to ensure relevant skills are being taught and keep up with an evolving sector.
As the Carbon Border Adjustment Mechanism (CBAM) takes effect along with cultural demands to be carbon neutral and Net Zero, pressure is clearly on the manufacturing industry to be more sustainable. Now more than ever there is a need to further implement lean manufacturing principles, adopt renewable energy solutions and monitor energy consumption further.
There is also a clear crossover between challenges facing manufacturing, with the ability to monitor energy and efficiency of factories in real time only being available to businesses with the correct infrastructure in place. When you add in needing the skill to interpret the data to make informed business decisions, it’s clear that suitable education is needed in areas that are not as typically found in manufacturing.
Our specialist insight
"Manufacturers ultimately require a rounded approach to overcome barriers for growth. Further knowledge and understanding how actions can have various positive impacts across the business, as to not view them as mutually exclusive challenges to overcome."
