Introduction & Overview
March, as continues to be the case in Manufacturing was another month of navigation of change and ‘certain uncertainty’. We had the Spring statement, which I’m afraid, didn’t result in anything materially different and we have now just walked into Trade Tariff changes from the US. (but that’s an April discussion point). With the sector facing its first contraction in output in a decade and mounting pressures from rising costs, continued global uncertainties, and domestic policy changes, this period has been both challenging, yet in some way revealing. In this blog, I explore the reports and data from the Make UK/BDO Manufacturing Outlook alongside some pertinent news highlights – including reflections on International Women’s Day, hiring trends, and some statements from industry leaders. I will also add a little bit of personal commentary from my meetings and conversations in March.
1. Industry News & Economic Feedback
Macro Data & Trends
I’m afraid, as was expected, recent figures from the Make UK/BDO Manufacturing Outlook indicate a stark shift in the sector’s performance. Output, which soared at +20% in the previous quarter, has now contracted by 1% – a decline that signals underlying weaknesses. Domestic orders have also slipped into negative territory, falling to –7%, while export orders have dropped dramatically from a robust +10% to a mere +1%. These figures come against a backdrop of rising employment costs, significant increases in National Insurance contributions, and global uncertainties such as tariff risks (which we know have come to fruition) and the natural resultant of heightened geopolitical tensions. It will be interesting to see how Europe and Asia respond, and whether this creates any opportunity for the UK.
Key economic indicators reveal a sector that is clearly feeling the pinch. Business confidence, although buoyed in my local region of Yorkshire & the Humber as well as the East of England, remains uneven across the UK. The data shows that while there is an appetite for future growth (with output expectations for the next quarter forecasting a rebound of up to 23%), the current environment is one of caution and reactive strategy rather than robust expansion. Before I move on, I have to say, from the conversations I have been having that 23% is quite a remarkable figure. When overall growth for the year is forecast across all manufacturing at -0.5% to +1% is this a statement of overconfidence to ensure a feeling of positivity after a disappointing Q1. We know that sentiment and confidence can bolster a market but this is somewhat higher than the information I am hearing in the market. That said, from a search and recruitment perspective, March seems to have signalled some positive intent with job flow up over 25% from February so this could drive a Q2 and April surge.
Regional & Sectoral Insights
A closer examination of regional data reveals a diverse landscape. For example, Yorkshire & the Humber recorded a business confidence level of 7.9 – the highest among English regions – while Wales lagged significantly at 4.3. This disparity reflects localised challenges that range from labour shortages to variable demand conditions. Sector specific insights indicate that sub-sectors such as electronics are faring relatively well, buoyed by investments in automation and digital technology, whereas traditional areas like basic metals and metal products are struggling amidst a contracting domestic market. As a business that operates in both Metals Manufacturing and the Built Environment we can definitely feel the challenges faced by our customers in these sectors with our job flow, in these markets, down considerably.
2. Workforce Trends
News Highlights & Key Events
March has been a month of notable events that extend beyond the quarterly figures. International Women’s Day provided a moment of reflection and celebration of diversity within manufacturing. We all know that we must work harder to promote manufacturing sector roles as an attractive choice for diverse workers, especially in an increasingly digital world. Partnerships with colleges and a continued promotion of more apprenticeship schemes are helping but, with engineering roles being the most challenging recruitment issue, we need to change the language we use and, dare I say it, the cultural perception of what an engineering role is, and can be, within the sector.
Hiring Trends & Company Initiatives
Despite the overall contraction, there are pockets of optimism. Several companies have announced hiring initiatives and are actively investing in skills development. For instance, industry leaders have reported that small manufacturers are taking a proactive approach by upskilling their workforce in digital technologies and automation. One company, as noted in recent interviews, stated, “We are actively hiring and investing in automation to offset rising labour costs and to future-proof our operations,” reflecting a broader trend of firms adapting to the new economic realities. In contrast however I had a number of conversations with executive in SME businesses stating they just can’t afford to invest in the digital transformation needed.
Moreover, innovative voices in the industry, including CEOs from sectors as diverse as aluminium processing and high-tech manufacturing – are pushing for a re-evaluation of traditional recruitment strategies. This includes targeted efforts to support underrepresented groups and to embrace flexible working practices, which have been spotlighted during the International Women’s Day celebrations. We should also embrace the need to use an ageing workforce and re-train to maximise our productivity. With the younger generation perhaps seeming less inclined to believe in a ‘company for life’ mentality it is important that we balance experience, wisdom with new ideas and innovation and this requires every business, no matter what the scale, to think differently around how they hire and attract. (Oh, and not for one minute am I suggesting that the ideas come from a new generation or wisdom comes from experience, just making a point)
3. Expert Commentary & Future Outlook
I think we all know that all Manufacturing business and Industry leaders are united in their call for clearer, more consistent government support. The challenge everyone faces is that fine line between the need to shout at our government stating a lack of action, whilst at the same time looking to curry favour to ensure we are front of the queue with regards to focus and investment. Chris Spray and Stephen Phipson embody this challenge in recent statements:
Chris Spray, Manufacturing Excellence Director at Lineview, stated, “We need policy that shifts from reactive short-term fixes to proactive, long-term strategies that foster investment in innovation and skills.”
Similarly, Stephen Phipson, CEO of Make UK, stressed that “Without a joined-up strategy that aligns defence, energy, trade, and skills policies, we risk further erosion of our competitive edge on the global stage.”
Both know we need action but hold themselves back from a blistering attack on the current lack of action.
That said, and looking ahead, while the immediate outlook remains cautious—with forecasts predicting a modest rebound if conditions improve—the manufacturing industry has reacted. In March we have seen job flow improve, confidence increase and business start making leadership changes to ensure operational improvement alongside new market/product development. There is a sense, from conversations across this industry, that this could be another year of consolidation in markets with an understanding that sometimes the best way to protect, or enhance profitability, is through acquisitions/deals rather than large scale investment.
Conclusion
In summary, March 2025 has been a month of significant recalibration for UK manufacturing. The data paints a challenging picture with contraction in output and orders, yet the stories from proactive hiring trends, Q2 belief and a need for action provide a glimmer of hope. For manufacturing leaders, the message is clear: it is time to engage with government, collaborate locally, invest in skills (and I would say that wouldn’t I!?), and innovate to overcome current challenges.
I invite you to share your experiences and insights in the comments below. How is your business adapting to these changing conditions? What policy measures do you believe are most critical?
Jason Saunders, Managing Partner
