The UK manufacturing sector saw a promising resurgence in the second half of 2024, with growth in both output and new orders, driving the first workforce expansion since September 2022. However, despite this positive momentum, manufacturing remains one of the most insolvency-prone industries, responsible for over 10% of all corporate failures. 

Companies are under immense pressure from soaring operational costs, driven by high energy prices, inflation, and rising interest rates, all while trying to meet stringent sustainability and net-zero targets. These burdens have hit smaller manufacturers, such as those in metal fabrication, particularly hard.

Geopolitical factors and a post Brexit economic climate have further disrupted global supply chains, adding to the sector’s challenges. Yet, amidst these pressures, mergers and acquisitions (M&A) activity in manufacturing is anticipated to surge in late 2024, fueled by growing business confidence. According to BDO LLP, deal activity could intensify if the political and tax landscape remains conducive to investment, though a possible hike in capital gains tax may temper this optimism.

While 2023 saw steady deal volumes, the sector is increasingly driven by sustainability. Investments in circular economy initiatives surged by 25%, reflecting a shift toward environmentally sustainable business practices. Manufacturers that embrace sustainability stand to gain from this trend, while those slow to adapt may find themselves increasingly vulnerable to insolvency.

Although short-term indicators point to reduced insolvency levels, the industry faces ongoing risks. The new government’s industrial strategy, which prioritises growth through domestic and international trade, will play a pivotal role in shaping the sector’s future. The divide between forward-thinking manufacturers and those lagging behind in adopting sustainable models may ultimately define who thrives and who collapses in this volatile environment.

Manufacturing News | Britain’s first mini-nuclear reactor factory may build soon

A major boost for South Yorkshire’s economy could be on the horizon as US nuclear giant Holtec considers building a £1.5bn factory in the region. The plant, which would produce components for small modular reactors (SMRs), could create up to 3,000 high-tech jobs. South Yorkshire has emerged as the frontrunner due to its engineering heritage and proximity to Sheffield Forgemasters, essential for reactor production. 

Other potential sites are being reviewed in the West Midlands, Cumbria, and Teesside, but Holtec Britain’s director, Gareth Thomas, confirmed South Yorkshire’s lead. SMRs are seen as a game-changer for nuclear energy, promising lower costs and faster construction than traditional reactors. However, the technology is still largely untested commercially. Holtec is competing against four other companies, including Rolls-Royce and Westinghouse, for government backing. Two winners will be chosen by early 2025 to develop the UK’s first reactors.

South Yorkshire Mayor Oliver Coppard highlighted the region’s engineering expertise and cleantech sector, positioning it as a hub for the UK’s clean energy future. Energy Secretary Ed Miliband’s constituency, Doncaster North, is also under consideration for the factory location.

Manufacturing News | Ineos Automotive halts production

Ineos Automotive, the car manufacturing arm of Sir Jim Ratcliffe’s empire, has paused production of its Grenadier SUVs and Quartermaster pickup trucks at its French factory in Hambach. The halt is due to a critical component shortage, as the supplier of a vital part faces possible bankruptcy.

CEO Lynn Calder revealed that the unnamed supplier is in a “pre-insolvency situation,” delaying production until late 2024 or early 2025. While the missing part is a trim component, it is essential to complete the vehicles. Ineos, which has just launched the Quartermaster in Europe, is working to support the supplier in hopes of resuming production soon.

Despite this setback, the Grenadier, inspired by the Land Rover Defender and Sir Jim’s vision from a London pub, continues to receive positive feedback globally. Ineos aims to have sold over 20,000 vehicles by year-end, with expansion into markets like China and Mexico.

Manufacturing News | Fablink acquired out of administration

Around 200 jobs in the North East have been preserved following a rescue deal for metalwork specialist Fablink. The company, known for manufacturing metal pressings and fuel tanks, has been bought out of administration as part of a larger group pre-pack arrangement. This move has saved more than 500 jobs across Fablink’s UK sites.

Insolvency experts at Interpath Advisory facilitated the acquisition by Ensco 1 Limited, which will now operate under the name Wharfside Industrials. Fablink, a key supplier to major automotive clients, had explored various rescue options, including sales and restructuring, before entering administration. The Bishop Auckland-based subsidiary, Fablink Tank Systems Limited, faced challenges such as supply chain disruptions, skills shortages, and inflation, which contributed to an operating loss of £533,000 despite achieving record turnover of £26m in 2023.

Despite these setbacks, directors had anticipated a recovery in profit margins, though demand in key sectors like off-highway and construction had slightly weakened. The business continues to work closely with creditors and stakeholders to minimize further disruption.

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