Recent figures confirm what many British manufacturers already know: the UK’s manufacturing output has recorded its steepest decline among Europe’s major economies, extending a tough spell for the sector. Energy prices remain among the highest in Europe – even with the government’s new industrial strategy set to ease some of the burden in the coming years – and labour costs continue to rise, squeezing already tight margins.
Yet despite these headwinds, confidence in the sector’s future is holding firm. Surveys show that 60 per cent of manufacturers expect revenues to grow again in 2025, and many are backing that optimism with action: prioritising smarter systems, more flexible production models, and AI-powered technologies to protect profitability and build long-term resilience. From decentralising operations to embracing connected, data-driven smart factories, forward-thinking businesses are proving that adversity can be the catalyst for lasting improvement.
Resilient supply chains through localised production
Taking a holistic approach to systemic challenges brings significant value, fostering sustainable solutions and unlocking long-term growth opportunities. For manufacturers, this means looking beyond the shop floor to address vulnerabilities within global supply chains. Geopolitical conflicts, volatile markets, and extreme weather have all contributed to supply chain bottlenecks in recent months. Unsurprisingly, a recent McKinsey survey revealed that 95 per cent of manufacturers have faced supply chain disruptions and anticipate further challenges in the coming year. In response, many are turning to decentralised manufacturing as a proactive strategy to navigate and adapt to these inevitable events.
Decentralised manufacturing moves away from the traditional model of relying on a few large facilities, replacing it with a network of smaller, strategically located production sites closer to key markets. This approach minimises dependence on a single location, creating a more agile and resilient supply chain. By developing localised supply chains for each site, manufacturers can operate independently or collaboratively, ensuring greater flexibility. For metalforming manufacturers, this might involve setting up smaller presses or machining facilities in regions where demand is high, reducing the need to transport heavy, custom-formed components across long distances. If one facility is disrupted, operations can seamlessly shift to others, diversifying risk, maintaining production continuity, and reducing exposure to external shocks.
Operationally, decentralisation offers significant advantages. Locating production sites near end markets reduces transportation costs and delivery times, which is particularly crucial for manufacturers producing time-sensitive, high-precision components for industries like automotive or aerospace. Proximity to customers also allows manufacturers to respond more rapidly to fluctuations in demand or custom orders, improving customer satisfaction. Moreover, decentralisation enables manufacturers to tailor production to local markets, whether that involves customising metal parts to meet regional regulatory requirements or adjusting production volumes based on localised demand trends.
For metalforming manufacturers, decentralisation isn’t just about overcoming immediate challenges—it’s about building resilience for the future. By adopting this approach, they can better anticipate market volatility, respond to unforeseen disruptions to mitigate impacts, and position themselves for long-term success in an increasingly complex global landscape.
Inside the smart factory
Honing the focus within the shop floor, manufacturers are transforming their facilities into smart factories by embracing Industry 4.0 technologies to stay flexible, connected, and proactive. Tools like big data analytics, AI, digital twin technology, and collaborative robots (cobots) are driving innovation and reducing labour costs while digitising operations. Big data analytics play a pivotal role by collecting and interpreting vast datasets from machinery, sensors, and production lines. These insights allow manufacturers to identify inefficiencies, optimise energy use, and implement cost-saving measures.
Machine learning (ML) has also emerged as a catalyst for future proofing operations. Machine learning analyses complex datasets beyond the scope of human capabilities, uncovering critical insights to transform production management. It empowers manufacturers to anticipate and prevent equipment failures through predictive maintenance, enhance quality control with greater precision, and maximise production efficiency. Given its potential, 74 per cent have already adopted ML or are preparing for its implementation. Beyond potential, some are already seeing ROI, with Accenture reporting that 42 per cent of companies have seen their AI and ML initiatives more profitable than initially expected.
Boosting productivity with digital twins and cobots
AI is just one part of the smart factory revolution, with other technologies like digital twins addressing critical challenges specific to metalforming. For example, adjusting tooling for a new product or process carries both cost and risk. Digital twins—virtual replicas of physical products or processes—allow manufacturers to simulate these changes in a digital environment. This approach enables metalformers to test die adjustments, optimise press performance, or evaluate the effects of altering material grades without disrupting production. By mitigating risks and reducing costs, digital twins foster innovation, which is why 70 per cent of technology leaders at large enterprises are actively exploring or investing.
Beyond virtual tools, smart factories also leverage physical innovations like cobots, which can assist with repetitive and physically demanding tasks such as loading heavy blanks into presses, stacking finished metal components, or palletising stamped parts. By handling these tasks, cobots reduce ergonomic risks for workers, speed up processing times, and improve overall throughput. In fact, a single cobot can increase production output by up to 40 per cent, making it an invaluable addition to any facility.
Combining human expertise with machine intelligence, smart factory technologies are enabling metalformers to drive efficiency, enhance safety, and remain competitive. AI applications are expanding, from predictive maintenance for stamping presses to optimising production schedules and managing supply chains. As these tools become increasingly accessible, manufacturers have abundant opportunities to integrate cutting-edge solutions and position themselves for sustainable growth in the years ahead.
Looking ahead
As British manufacturers navigate the rest of 2025, embracing adaptability is key to overcoming continued cost pressures and market volatility. The recently announced industrial strategy will help ease some of the energy burden in the years ahead, but smart investments today will make the biggest difference now. By combining decentralised operations with connected, AI-powered smart factories, manufacturers can protect profits, build resilience and unlock growth opportunities even in challenging times.
Aldo Veenstra, president Manufacturing Division Europe, ECI Software Solutions
