The UK manufacturing and technical sectors have just wrapped up a year marked by transformation, pressure, and huge leaps in innovation. Our 2025 End of Year Manufacturing & Technical Report reveals a sector that’s adapting fast, balancing rising costs with rapid digitalisation, evolving talent demands, and major change across automotive, aerospace, FMCG and advanced engineering.
If you’re operating in this space, whether you’re scaling a production facility, hiring technical talent, or navigating supply chain uncertainty, the trends emerging this year offer clear signals on where the industry is heading next.
A sector under pressure, but moving forward
Despite mid-year slowdowns, the UK manufacturing sector remains globally competitive, with many regions now operating above pre-pandemic levels. Aerospace and defence continue to act as powerful engines of growth, while manufacturing leaders are increasingly turning to AI, automation, digital twins and real-time data tools to protect margins and unlock efficiency.
However, rising costs across energy, materials, logistics and labour continue to squeeze investment and push businesses to rethink production, supply chains and operational strategy. Many organisations have postponed capital projects or trimmed expansion plans to stay resilient.
Automation & digitalisation: No longer optional
The shift to smart manufacturing is accelerating - fast.
Manufacturers are integrating robotics, advanced sensors, AI-driven analytics and digital twins not just to boost productivity, but to build resilience. Automation is increasingly being used to remove repetitive or labour-intensive tasks, allowing skilled professionals to move into higher-value roles.
This digital evolution is now central to competitiveness, helping businesses respond quickly to supply chain disruption, sustainability demands and changes in market volume.
Expect this to intensify in 2026, with more investment flowing into automation, data-driven production, and energy-efficient smart factories.
Skills shortages are reshaping hiring
Talent remains one of the sector’s biggest challenges.
There is high and persistent demand for engineers, technicians, and digital specialists, particularly those experienced in robotics, automation, and advanced engineering systems. Companies are responding by:
- increasing salaries
- offering more flexible working patterns
- upskilling internal teams to fill critical gaps
Salary expectations are rising, and candidates are placing greater value on development, culture, work–life balance, and long-term stability. Hiring intentions remain strong, but vacancies often stay open longer than planned due to talent scarcity, especially in regional hubs and high-tech clusters.
Sector deep-dive: What’s happening across the market?
Automotive: A year of transition
The automotive industry saw output fall by 11.9%, with commercial vehicle production dropping sharply. The decline is tied to factory retooling and softer global demand. But there’s a bright spot: electrified vehicles now make up 41.5% of UK output, and investment in EV platforms continues to create strong demand for specialists in automation, systems integration and electrification.
Expect 2026 to bring more EV-focused hiring, continued supply chain challenges, and a sharper strategic realignment across manufacturers.
Aerospace & Defence: Strong, skilled and growing
Aerospace remains one of the UK’s most powerful industrial sectors, contributing £42bn to the economy and supporting over 440,000 skilled jobs. With global demand rising and defence orders strong, competition for technical talent, especially in certification, composites and systems engineering, is intense.
2026 will push the sector deeper into green propulsion, composites, and low-carbon aircraft technologies as sustainability and operational efficiency take centre stage.
FMCG: Resilience through innovation
The FMCG industry has been hit particularly hard by inflation, with energy, packaging and raw material costs all rising. Profit margins are tightening, yet innovation continues to accelerate, driven by SMEs and major brands alike.
E-commerce is reshaping operations, with real-time data, D2C strategies, and supply-chain digitalisation becoming essential. Looking ahead, 2026 is set to bring:
- more private-label growth
- bigger investments in automation and forecasting tools
- increased movement toward recyclable and refillable packaging
Looking to 2026: Smarter, greener, more competitive
Across all three core manufacturing sectors, a few themes are undeniable:
- Automation will continue to accelerate.
To combat cost pressures and skills gaps, businesses will increase investment in robotics, AI and integrated digital manufacturing systems.
- Sustainability will become a defining competitive advantage.
Energy efficiency, low-carbon production, greener supply chains and sustainable engineering will drive investment decisions.
- Talent strategy will make or break growth plans.
Companies that build strong engineering pipelines, offer compelling development opportunities, and connect more deeply with candidates’ values will outperform their competitors.
Download the full 2025 Manufacturing & Technical report
This summary only scratches the surface.
For deeper sector insights, data, and expert hiring commentary across manufacturing, automotive, aerospace & defence, and FMCG, download the full report below:
[Download the 2025 End of Year Manufacturing & Technical Report]
It’s packed with actionable analysis to help leaders make smarter decisions, plan workforce strategy, and stay ahead of the shifts transforming UK industry.
