UK and Irish manufacturers are facing rising costs and economic uncertainty. Despite these challenges, the focus is shifting towards strategic growth, digital innovation, and diversification. The Executive Survey 2026 from Make UK, in association with PwC UK, highlights a wave of optimism among manufacturers, with nearly two-thirds of companies believing that the opportunities ahead outweigh the risks.
Key Survey Findings
Cost Pressures:
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86% of manufacturers expect employment costs to rise in 2026.
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66% of businesses anticipate an increase in energy costs.
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53% of manufacturers are facing higher costs for other business expenses (e.g., materials and logistics).
Focus on Growth Over Cost-Cutting:
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68% of manufacturers plan to invest in new product development.
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60% are increasing investment in digital technologies, including AI and automation.
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42% are exploring new export markets.
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37% view marketing and customer engagement as key growth drivers.
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36% plan to expand their product offerings to meet evolving customer needs.
Digital Transformation & Cybersecurity:
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55% of manufacturers are planning to increase their investment in cybersecurity, up from 45% in 2025.
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60% are prioritising the adoption of digital technologies, AI, and automation to boost efficiency and competitiveness.
Diversification & New Markets:
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51% of manufacturers are considering entering new sectors.
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55% plan to expand their product or service portfolios in response to customer demands.
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42% are focused on exporting into new markets.
Labour & Skills:
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66% of manufacturers are prioritising leadership and management training.
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40% are focusing on upskilling their existing workforce, particularly for automation and digitalisation.
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48,000 vacancies remain in the UK manufacturing sector, signalling a strong demand for skilled workers.
Key Challenges Facing Manufacturers in 2026
A primary concern for manufacturers is rising employment costs, which 86% of businesses expect to increase in the coming year. This pressure, alongside higher energy costs and the continued squeeze on margins, is forcing manufacturers to reassess their strategies.
However, the survey reveals that rather than focusing solely on cost-cutting, businesses are prioritising growth. Many are turning to digital transformation, investing in new products, AI, automation, and strengthening customer engagement. These moves are aimed at improving competitiveness and future-proofing their operations.
The Rise of Digital Technologies and AI
As costs rise, digital transformation has become more important than ever. Over 60% of manufacturers plan to invest in digital technologies, including AI and automation, to streamline operations, improve productivity, and stay ahead of competitors. Embracing these technologies will help manufacturers optimise production, reduce waste, and enhance decision-making processes.
The increased reliance on digital technologies is also contributing to a growing focus on cybersecurity. With cyber threats on the rise, 55% of manufacturers are planning to boost their cybersecurity investments to safeguard critical data and operations. The balance between growth and security is crucial for manufacturers to remain resilient against potential disruptions.
Diversification and New Markets
Expanding product offerings and entering new markets is another key strategy for growth. The survey reveals that 55% of manufacturers plan to develop new products, while 42% are looking to expand into international markets. For manufacturers in both the UK and Ireland, diversifying into new sectors and leveraging digital tools to gain market insights will be essential to their success in 2026.
New market entry and product diversification are seen as the primary means of offsetting the risks posed by rising costs. With many companies looking beyond their traditional markets, there is significant potential for growth by tapping into new customer segments and geographic regions.
Cybersecurity and Digital Resilience
With the increasing reliance on digital systems, cybersecurity has risen to the forefront of manufacturers’ agendas. According to the survey, 55% of companies plan to increase their cybersecurity investments. Balancing the need to invest in growth with the importance of ensuring long-term digital resilience is essential for safeguarding businesses against operational disruptions, data breaches, and reputational damage.
The Future of Manufacturing: A Focus on People and Sustainability
Manufacturers are also recognising the importance of their workforce in driving innovation. Many businesses are investing in upskilling their teams, particularly in digital skills, to cope with the growing demands of automation and digitalisation. As the sector adapts to technological advancements, ensuring that workers are equipped with the necessary skills will be a key factor in maintaining competitiveness.
Sustainability remains a critical focus as well. The survey notes that 2026 will see more investment in energy efficiency and circular manufacturing practices. Manufacturers who invest in these initiatives will not only reduce their environmental footprint but also drive long-term cost savings and operational efficiency.
Conclusion
In conclusion, while manufacturers face several challenges in 2026, the opportunity for growth through innovation, diversification, and digital transformation is clear. By embracing new technologies, expanding into new markets, and focusing on customer engagement, manufacturers can secure a competitive edge and position themselves for long-term success.
How Target Integration Can Help
At Target Integration, we are dedicated to helping manufacturers in the UK and Ireland unlock their full potential through tailored digital transformation solutions. Specialising in Enterprise Resource Planning (ERP) solutions, we empower businesses to optimise their operations, integrate AI and automation, and enhance customer engagement. Our team of experts is committed to providing innovative solutions that drive efficiency, reduce costs, and improve resilience in the face of evolving industry challenges.
From product innovation and AI adoption to cybersecurity and data-driven decision-making, we support manufacturers in every step of their digital transformation journey. Whether you’re looking to diversify your product portfolio, expand into new markets, or strengthen your IT infrastructure, Target Integration has the expertise to help you succeed in 2026 and beyond.
📩 Contact us today to discuss how we can support your growth strategy in 2026 and beyond.
