MHA report shows the most pressing issue in manufacturing for the West Midlands is regulations
Steve Hale · Posted on: July 8th 2025 · read
The view from Midland’s businesses across various aspects of the survey broadly correlated with the National picture, but with some key variations were highlighted.
The top 3 key challenges faced by businesses nationally were increases in the tax burden, Cyber security and Regulation, and these also featured highly in responses from the Midlands.
However, these were all eclipsed in the Midlands by skills shortages, with over 41% of respondents identifying this as a key challenge. This was a notable variance to the national position and is a real indicator of the continuing difficulties facing businesses in this area.
The proportion of businesses that highlighted Tariffs as a key challenge (32%) was also higher than the national position, likely reflecting the predominance of export-heavy industries with complex international supply chains —particularly automotive, aerospace, and advanced engineering.
Reflective of the national position, investment in IT, Technology / AI and supply chain options were the most common actions being taken to address challenges, and given the skills shortage issue, it is perhaps not surprising that actions being taken across businesses in the region are also highly focused on this area.
In seeking to address skills gaps, some 50% of businesses are actively upskilling existing staff, with 31% of respondents seeking to recruit new staff, outweighing the 19% who anticipate a reduction. This contrasts with a national position where the proportion of businesses seeking to recruit was offset by a similar proportion of businesses expecting a reduction (both being 27%).
investment in AI has emerged as a key means of businesses addressing skills shortages - in fact in the Midlands it was the single most prevalent action being taken, with 58% of businesses actioning this compared to a national position of 44%.
Considering sustainability, companies have been particularly focused on supply chains – 59% using recyclable materials where possible, 51% partnering with sustainable suppliers, and over 62% are adopting renewable energy sources (vs 44% nationally). In contrast, the proportion targeting energy use reduction was 33% - relatively low compared to the UK position of 45%.
Looking forwards, respondents remain relatively optimistic with the vast majority anticipating growth in the next 12 months. This is mirrored by nearly all businesses anticipating increased R&D going forwards, primarily on New Product Development and Technology adoption.
Our specialist insight
"In summary, Midlands manufacturing businesses have responded with cautious optimism and a positive outlook for growth and innovation. This is against a backdrop of the challenges shared across the UK manufacturing sector, and skills shortages in the region that remain to be fully addressed."
