Manufacturers are more confident about the year ahead than they were 12 months ago and continue to invest despite operational pressures and macro-economic uncertainty.
MHA’s Manufacturing Report 2026 shows 81% of the 1,000 manufacturing C-suite, including more than 100 in Wales, who were surveyed last month expect growth above 3% in the next 12 months, up from 77% in 2025, while 26% expect growth above 5%, compared with 22% last year.
That stronger outlook is being matched by continued investment in research and development, technology and AI, even as supply chain disruption, cybersecurity and energy costs remain major concerns. Energy costs are now the top concern for Welsh manufacturers at 36%, followed by the tech evolution cited by 34% of respondents
Manufacturers’ biggest risks are increasingly operational in nature. Supply chain disruption is cited by 35% of respondents, up from 31% in 2025, energy costs by 33%, up from 30%, and cybersecurity by 34%, compared with 33% last year. By contrast, tax has become less immediate as a pressure point, falling from 35% in 2025 to 26% in 2026.
The findings suggest manufacturers are taking a more targeted approach to resilience, combining investment in technology, skills and operations while responding to different regional and business pressures.
Brian Garland, MHA Partner based in Swansea, said:
“Manufacturers remain optimistic, but that optimism is grounded in reality. Businesses are still dealing with geopolitical uncertainty, cost pressure and skills shortages, yet they are continuing to invest, innovate and plan for growth rather than retreating.”
He added:
“That confidence is not evenly spread. Regional differences are clear, with some manufacturers focused on strengthening core operations and others moving faster on automation, digital adoption and AI. The message for policymakers is equally clear, businesses need a stable, long-term framework that supports investment and reflects realities on the ground.”
Manufacturers are responding in practical ways, with 41% prioritising investment in new technology, including AI, and 40% focused on strengthening IT systems. The findings also point to a broader workforce strategy, with firms placing greater emphasis on upskilling, partnerships and building in-house expertise rather than job cuts.
The North West remains one of the most optimistic regions, while the West Midlands is more downbeat, highlighting an uneven picture across the UK. The report also points to a more differentiated approach to workforce planning, with traditional manufacturing regions focused on apprenticeships and partnerships, while higher-cost regions place greater emphasis on automation and digital substitution.
R&D budgets are expected to rise by around 5% on average, with stronger sentiment in the East Midlands, North West and among larger firms. Investment priorities differ by region, with London and the South East showing stronger focus on technology, AI and IT systems, while the Midlands, North West and Wales place greater emphasis on machinery, equipment and process improvement.
Business size also shapes the pressure points. Cybersecurity is the top concern for smaller firms, skills shortages are most acute for mid-sized businesses, and larger manufacturers are more focused on supply chain risk. Across the sector, firms are generally prioritising operational efficiency and non-people cost reduction ahead of more disruptive measures such as redundancies.
Regional market dynamics also influence how businesses manage cost pressure. Export-oriented manufacturers are more likely to absorb higher costs through margins, while those serving domestic markets are more likely to pass costs on to consumers. The findings also underline the importance of access to finance, with lending continuing to support investment in automation, supply chains, energy efficiency and digital transformation.
Despite the announcement on the UK Government’s Industrial Strategy last June, businesses continue to call for practical support on skills, energy affordability, access to finance and friction-free trade, alongside a stable long-term policy framework that gives firms confidence to invest. The Industrial Strategy will be judged on whether it delivers that consistency across regions and sectors.
Garland said:
“The global backdrop remains uncertain, but the response from manufacturers is not hesitation. Firms are tackling immediate pressures while continuing to invest for the future.
“The challenge now is to strike the right balance between supportive, consistent intervention and the flexibility businesses need to innovate and grow.”
MHA has 116 people in offices in Cardiff and Swansea.
