Manufacturing in 2025: Growth, Risk, and the Strategic Path Forward

This week, Make UK released its latest Executive Survey 2025, highlighting the growing challenge of manufacturing cost pressures in 2025. Rising employment costs, supply chain disruptions, and the need for technology-driven efficiencies are shaping how manufacturers approach growth. 

For operational and financial leaders, this survey provides critical insights into the evolving landscape and strategies for navigating these pressures effectively. It’s not just about weathering economic challenges—it’s about making strategic choices that will define the future of manufacturing.

Balancing Growth with Cost Pressures

The past few years have been marked by volatility, but the industry entered late 2024 with cautious optimism. Input costs were stabilising, and the political landscape had settled. However, the reality is that manufacturers are now facing a new wave of financial pressure, particularly in employment costs. An overwhelming 92% of respondents expect rising wage bills to impact their bottom line.

So, how do leaders respond? The data points to two major strategic shifts:

1. A move away from headcount expansion – Only 7% of manufacturers are focusing on growing their workforce.
2. A pivot toward technology-driven efficiency – Instead of hiring, manufacturers are investing in AI, automation, and cloud technologies, with 29% citing these as key opportunities for 2025.

This marks a turning point. While previous years saw tech investments delivering incremental benefits, the cost environment now demands wholesale transformation. The focus is no longer just about increasing productivity—it’s about revolutionising entire value chains, from supply chain management to operational efficiencies.

This trend appears to be more pronounced in the UK than in the US, where Deloitte’s 2024 Manufacturing Outlookstill predicts steady workforce expansion alongside AI adoption. Similarly, Rockwell Automation’s 9th Annual State of Smart Manufacturing Report noted that 98% of manufacturers expected to maintain or grow their workforce due to smart manufacturing adoption. However, in the UK, the survey suggests automation is increasingly seen as a direct replacement for hiring.

Innovation as a Driver of Growth

Despite cost pressures, manufacturers aren’t cutting back on innovation. In fact, almost half of businesses are expanding their product portfolios, despite a challenging financial backdrop. This move might seem counterintuitive when budgets are tight, but it’s a recognition that long-term growth requires new revenue streams.

This represents a more aggressive UK approach compared to broader industry trends. Reports like Fictiv’s 2024 State of Manufacturing suggested that most manufacturers were prioritising supply chain resilience over new product development. However, UK manufacturers appear to be doubling down on product expansion as a core growth strategy.

Pairing product innovation with digital transformation presents a dual advantage:

• Reducing production faults and waste through AI and digital twin technologies, which are now a priority in World Economic Forum’s AI in Industrial Operations report.
• Expanding market opportunities through enhanced product capabilities.

For operational leaders, this means that innovation is no longer a ‘nice-to-have’—it’s a financial necessity. Businesses that don’t invest in new products risk stagnation at a time when adaptability is key.

The Workforce Challenge: Tech vs. Talent

While AI and automation are the future, human skills remain irreplaceable. The workforce of 2025 will need more than just technical ability—critical thinking, creativity, and judgment will be just as important.

This presents a paradox: manufacturers are reducing hiring, but at the same time, they need to upskill their existing teams. The companies that invest in digital training and workforce development will be the ones that thrive.

One particularly strong trend is the rise of ‘green jobs’ in manufacturing, with a 29% increase in sustainability-related roles over the past year. As businesses accelerate decarbonisation efforts, embedding sustainability into workforce strategy is becoming a long-term competitive advantage.

This aligns with global trends, such as the World Economic Forum’s Circular Transformation Report, which identified ESG and green jobs as a growing priority. However, the Make UK survey suggests that UK manufacturers are going beyond compliance—they see sustainability skills as a source of job growth and competitive advantage, rather than just a regulatory requirement.

The Bigger Picture: UK vs Global Trends

Looking at the Make UK Survey 2025 alongside other industry reports, we can identify some notable differences in strategy:

1. UK manufacturers are relying more on automation and less on workforce expansion, whereas global reports still predict employment growth alongside AI.
2. UK manufacturers are prioritising product innovation, despite cost pressures, while other reports suggest a stronger focus on supply chain resilience.
3. Sustainability is becoming embedded in workforce planning, rather than being seen as just an ESG compliance requirement.

This suggests that UK manufacturing leaders are taking a more aggressive, tech-driven approach to growth. Rather than simply cutting costs, they are focusing on efficiency through AI, revenue growth through innovation, and long-term workforce resilience through sustainability initiatives.

What This Means for Leadership

For financial and operational leaders, these insights demand a rethink of traditional growth strategies. The 2025 manufacturing playbook isn’t about aggressive expansion—it’s about optimising, innovating, and adapting.

• Cutting costs isn’t enough—investment in technology must deliver a step change in efficiency.
• New revenue streams are essential—standing still isn’t an option in a shifting market.
• Skills and sustainability matter—a workforce that blends digital expertise with problem-solving will be the real differentiator.

The survey reinforces that manufacturing is central to the UK’s industrial strategy, and the companies that embrace this transformation will be best placed to lead.

Now, over to you: What’s your biggest strategic priority for 2025? Let’s discuss.

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