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South West bucks UK manufacturing decline as aerospace and defence firms report 'strong' start to 2025

Jan 16, 2026 By

Aerospace and defence firms in the West of England are experiencing "very strong demand" for business, bucking a wider UK decline in manufacturing, according to a new report.

Manufacturers across the region have reported a strong start to the year, the survey by national manufacturing body Make UK and business advisory firm BDO found.

Both output (+32%) and orders (+39%) were positive, with the forecast set to improve further in the next quarter. As a result, companies are looking to hire more staff with recruitment intentions increasing from +5% to +21% over Q2, the report said.

Capital expenditure plans are also significantly ahead of the national picture at +32%, while the South West's renewable energies sector is also seeing strong demand.

Nationally, Make UK is forecasting that British manufacturing will contract by -0.5% in 2025, down from a forecast of -0.2% in the last quarter, before growing by 1% in 2026.

Matthew Sewell, head of manufacturing at BDO in the South West, said: “The economy in the South West relies heavily on manufacturing, in particular the strength of the aerospace, defence and renewable energy sectors . It’s encouraging to see the region have a strong start to the year, but we cannot be complacent - our manufacturers are resilient but they’re not invincible.

“Manufacturers across the South West now need targeted support from government, whether that be reducing complexity, streamlining trade or boosting access to capital to enable them to focus on growth.”

Make UK is now calling on the government to bring forward a long-term industrial strategy with advanced manufacturing "at its heart" to help grow the economy.

Keri Anne Mruk, region director at Make UK in the South, said: “This has been a strong start to the year for manufacturers in the South West with the region bucking the national picture.

"To build on this it’s now essential that Government brings forward an industrial strategy at the earliest opportunity. This will give manufacturers the confidence to plan for the future with a stable, supportive policy environment.”

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Tekmar Group set for 'growth like never before' after posting strong earnings boost

Bosses at offshore specialist Tekmar say its markets are aligned “for growth like never before” after seeing its earnings rise to the highest level in five years. Based in Newton Aycliffe, Tekmar Group offers technology, services and products to customers around the world, with offices, manufacturing facilities, strategic supply partnerships and representation in 18 locations across Europe, Africa, the Middle East, Asia Pacific and North America. Last December, newly appointed CEO Richard Turner announced a three-year plan to transform Tekmar and realise its potential, after seeing headwinds which have impacted offshore renewables and the conventional energy markets subsiding. Now the firm has issued full year result for the year ended September 2024, highlighting a year of stabilisation. Revenues were £32.8m, down on the previous year’s £35.6m, but adjusted Ebitda (earnings before interest, taxes, depreciation, and amortisation) was £1.7m, up from £600,000. Its operating loss was reduced from £7.9m to £3.8m in the year, a figure it said reflected the successful execution of the group’s profit improvement plan, having worked through a remaining low margin backlog. The group held £4.6m of cash at the year end, with net debt of £1.6m - a figure which excludes the SCF Capital Partners £18m finance facility which its said remains undrawn and is available to drive growth through acquisitions. During the year, the group completed the divestment of its subsidiary, Subsea Innovation Limited for £1.9m, in line with its strategy to drive profitable growth. At the end of January it said its order book stood at £16.4m. In its Stock Market notes to shareholders, Tekmar said: “The board is encouraged that the market environment is improving and supports sustained demand for Tekmar’s technology and engineering services across our markets. Moreover, we believe Tekmar’s differentiated technology positions the group to outperform this improving market. This is supported by the group’s developing sales pipeline, which the board expects will convert to orders and revenue over time.” Richard Turner, CEO, said: “Overall, these results demonstrate we now have a stronger platform from which we can execute our medium-term plan to deliver true scale and diversification. FY24 was a transitionary year for Tekmar, where we focused on the basics - providing high-quality engineering, delivering on time and maintaining consistent commercial discipline. “This supported the group reporting its highest level of adjusted EBITDA since FY20, and a material improvement in gross margin to 32%. Looking ahead, our markets are aligned for growth like never before. Our strategy looks to capitalise on our industry pedigree to drive organic growth across all revenue streams, leverage our operational gearing to enhance our returns on sales, drive value through strategic M&A and generate cash to build our reserves and fuel our growth.”

Pearson Engineering works on robot mine sweeper being trialled by British Army

North East defence specialist Pearson Engineering has helped to develop a robot mine sweeper which is now being trialled by the British Army to clear explosives on the front lines. The Newcastle company, based in the famous Armstrong Works, has worked with the Defence Science and Technology Laboratory (Dstl) to create Weevil, a device which is hoped will replace current mine-clearing methods that included Trojan armoured vehicles, which require a three-person team to operate in hazardous areas. The robot mine sweeper is said to be able to clear minefields quicker and safer than present capabilities, reducing risk to soldiers on the front line and it can be operated via remote control by just one person from several miles away. The prototype – which is fitted with a mine plough to clear a safe path – has been successfully tested on a surrogate minefield in Newcastle, and the technology is now being passed to the British Army for further development and more trials. Ian Bell, CEO at Pearson Engineering, said: “We are proud to contribute to such game-changing capability. It brings together decades of development by Pearson Engineering, delivering the very best of minefield breaching technology proven around the world, and contemporary developments in teleoperation. “Work with UK MOD is an incredibly important part of our business, ensuring our troops get the latest in combat engineering capability and that we can effectively defend our nation and allies.” Luke Pollard, minister for the armed forces, said: “It won’t be a moment too soon when we no longer have to send our people directly into harm’s way to clear minefields. “This kit could tackle the deadly threat of mines in the most challenging environments, while being remotely operated by our soldiers several miles away. “It demonstrates British innovation, by British organisations, to protect British troops.” The robot was developed by the Defence Science and Technology Laboratory (DSTL) and Newcastle-based firm Pearson Engineering. The Ministry of Defence said there are no current plans to provide it to Ukraine. DSTL military adviser Major Andrew Maggs said: “Weevil is the perfect combination of tried and tested technology and modern advancements.

Newcastle College launches £850k advanced manufacturing skills facility

Leaders from some of Tyneside's top manufacturing and engineering companies have attended the launch of Newcastle College's new Advanced Manufacturing Suite. Delegates from firms such as Siemens Energy, Baker Hughes and Shepherd Offshore were shown the newly kitted out facility at the college's Rye Hill Campus, where cutting edge technology including robotics, 3D modelling equipment and CNC machines have been brought in to train students who could go on to careers in advanced manufacturing. About 500 students per year are expected to pass through the facility, which upgraded existing classroom and workshop space at the college, under the direction of an employer advisory board. Newcastle College principal Jon Ridley said the move is in response to consultation with industry about future skills needs, and part of a wider investment strategy across city centre campus, its Aviation Academy at Newcastle International Airport and its Wallsend-based Energy Academy, where students are trained for subsea and renewable energy industries. The new Advanced Manufacturing Suite will also be used to upskill local workers. He said: "At Newcastle College our courses are designed in collaboration - we co-create - with employers. So where employers are talking about the kit and equipment that's needed - we go out and purchase that equipment. "The difference in being a student at Newcastle College and a student at sixth form or a university, is experiential. It's about practicing and honing the skills on the kit." The array of workshop equipment supplied by Mach Machine tools spans different sub-sectors of advanced manufacturing with the college hoping to turn out workforce-ready candidates who can use the type of machinery and systems found on the workshop floor at local employers. Learners will have the opportunity to program robotic arms of the kind found on production lines and get to grips with precision milling machines used by component manufacturers. Overall, the investment in the machinery together with building work and IT required alongside it is worth £3m. Mr Ridley said the suite is intended to blend theory and applied learning - breaking traditional barriers between classrooms and workshop. He added: "It's 100% for the region and that's the thing about Newcastle College, we do have a large number of 16-18 year-olds and there are about 13,000 students here per year. "Only about 6,500 of those are kids and the rest are adults, and of those adults you've got people looking to retrain, re-skill and up-skill to enhance their careers. So to meet the region's ambitions, facilities like this are going to be the engine of that ambition."

Rolls-Royce shares could rocket 50% after stellar two-year rally, analysts claim

Analysts at Bank of America have predicted that shares in engineering behemoth Rolls-Royce could surge by an additional 50% following an already impressive two-year rally. On Friday, analyst Benjamin Heelan raised his price target from 830p to 1,150p, as reported by Bloomberg, which led to a mid-day share price increase of over three per cent, as reported by City AM. This news arrived just one day after the London-listed company reinstated dividend payouts for the first time since the pandemic and announced a £1bn share buyback scheme. The appointment of CEO Tufan Erginbilgic in January 2023 marked the start of a remarkable recovery for a company that was on the brink of bankruptcy during the Covid-19 crisis. A combination of soaring travel demand and escalating military expenditure worldwide has generated significant demand for Rolls' jet engines and defence technology. Heelan noted that the firm had reaped the benefits of robust deliveries, pricing, and an enhancement in the reliability of its engines. Travel demand has remained strong over the past year, with numerous airlines, including British Airways owner IAG, reporting record profits. On Tuesday, Prime Minister Sir Keir Starmer announced the largest increase in defence spending since the Cold War. From April 2027, it is set to rise to 2.5% of GDP, with a goal to reach 3% by the end of the parliament. Rolls-Royce is targeting profits of between £3.6bn and £3.9bn by 2028 and free cash flow of between £4.2bn and £4.5bn. Over the last 12 months, shares have risen by more than 100%.

Manufacturer Ebac defaults on loan as challenges continue, new accounts show

Challenging times at North East manufacturer Ebac have continued with the firm defaulting on a loan from a retirement fund, new accounts show. The Durham business, which makes washing machines, dehumidifiers, water coolers and heat pumps, has published delayed accounts for 2023 which show the continuation of a “challenging” few years. Recent years have seen Ebac investing heavily on new products, including domestic heat pumps suitable for the average UK home, and while the firm’s work on these products is beginning to bear fruit it has impacted profits, as well as its workforce, which was reduced from 254 to 188 as part of efforts to reduce its costs and boost performance. Accounts for 2023 show turnover of £17.75m down 18% on previous year’s £21.7m, although its operating losses narrowed from £2.7m to £1.53m. The accounts showed administrative expenses were significantly reduced from £8.2m to £5.95m, reflecting its restructuring initiatives. During the year the firm defaulted on a loan to the Trustees of Ebac Limited Retirement Benefit, a pension fund for founder John Elliott and family members, when it couldn’t make repayment on a loan of £1.57m. It said the company is in discussion with the trustees of the scheme to roll over and extend the loan repayment “however no agreement has been reached in relation to the proposal but the trustees have not indicated they will seek repayment of the loan before the end of the term of the loan”. Within the accounts, founder John Elliott said the firm continued with its work on new product development, although the investments weakened its bottom line. He said: “Despite a challenging market environment, the accounts for the year ending 2023 demonstrate an improvement in our financial performance compared to 2022. Although turnover is down our losses have reduced. This decrease was primarily attributable to necessary strategic changes. “During 2023, we continued with product developments that are looking very positive. Our British-designed heat pumps and home ventilation and dehumidification systems have USP’s that are receiving strong interest from landlords, social housing organisations and national builders. These products also have synergy with our technology and market know how. “While these products have not yet translated into revenue growth, we strongly believe they will deliver significant profits and will make Ebac a leader in energy-efficient and sustainable home solutions. We have spent more than £3m on these projects which has meant high borrowings and weakened our balance sheet. “We are currently going through a re-financing process where the directors and some of the related party liabilities are going to be capitalised to stabilise and strengthen the balance sheet.” Following publication of the 2023 accounts a spokesperson warned that results for 2024 will show a worsening if its financial position, but said that the family firm had put in millions of its own money to transform the company - a move which it said was already working in the new financial year. The spokesperson for Ebac said: “Despite a challenging market, the accounts for the year ending 2023 demonstrate an improvement in our financial position compared to 2022. We expect our 2024 year to be our worst in terms of losses, due to huge investments in new products including a new line of heat pumps and loft ventilation systems.

Versarien completes sale of South Korean factory for more than £600k

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Cardboard packaging firm DiamondPak in job creating £2m investment

Cardboard packaging specialist DiamondPak is investing £2m in new machinery to cement its position as the UK’s leading supplier to the e-commerce market in an expansion that will increase its headcount by 20%. The Pontypool-based business manufactures more than 50 million corrugated cardboard packages a year, much of which it supplies to leading global e-commerce businesses. DiamondPak is investing in new technology, including purchasing a new double-sided printing machine to help fulfill even more orders. The investment will help the business to grow further and allow it to employ up to 20 additional members of staff over the next couple of years. DiamondPak was founded in 2008 and is based in Skewfields, near Pontypool in Torfaen. It now employs more than 100 people and has an annual turnover of £15m. It designs, manufactures, assembles, and delivers a range of corrugated packaging from cardboard shipping boxes to promotional and protective packaging. The growth of online shopping in recent years, especially since the pandemic, has driven the e-commerce market to new heights. Figures show the UK is now the most lucrative e-commerce market in Europe, with an estimated 50 million users in 2024. The market is expected to grow by 7% over the next four years. DiamondPak chief executive, Russell Davies, said: “The UK e-commerce market is huge, and growing. DiamondPak is already the leading independent full line supplier of corrugated packaging to the e-commerce market in the UK, and this significant £2 million investment will help consolidate our position. It will also give us the enhanced capacity and flexibility we need to serve the evolving demands of the market in the coming years. “As a proud local employer in a region known for its manufacturing history, we’re especially pleased that this investment will help us grow our workforce even more, and allow us to create up to 20 skilled jobs in Pontypool.”

Spirax Group reports fall in full-year profits amid restructure

Cheltenham-headquartered engineering firm Spirax Group has reported a fall in profits for the financial year. The FTSE-100 company posted a 1% fall in reported revenue to £1.6bn for the 12 months to December 31, 2024. Adjusted profit before tax fell to £288.2m from £309.2m the year previously. The company said global industrial production growth for the full year was lower than had been forecast and second half recovery did not materialise with industrial production falling in key markets such as the US, Germany, France, Italy and the UK, representing around 50% of group sales. However, Sprirax added that all three of its business divisions delivered organic sales growth during the year with adjusted operating profit margins in line with expectations. According to the group, its restructuring strategy will realise annual savings of around £35m to fund investment in future organic growth. The cash costs to deliver the programme will be mostly incurred in 2025, Spirax said, and are expected to be around £35m, with an additional non-cash cost of £5m. The board declared a final dividend of 117.5p per ordinary share - up from 114p in 2023 - bringing the total dividend for the year to 165p. “The global macroeconomic environment remains highly uncertain,” the company said in a statement on Tuesday (March 11). “We remain cautious on industrial production in 2025 and have adopted more conservative assumptions in our planning. “We expect trading conditions in China to remain challenging as customers continue to reduce investments in the expansion of manufacturing capacity.” Looking to 2025, Spirax said it expected organic growth in group revenues consistent with that achieved in 2024 and “modestly higher” growth in the second half. It added that corporate costs for the year would be around £40m, reflecting higher levels of investment in growth. Nimesh Patel, group chief executive, said: "All three of our businesses delivered organic sales growth with margins in line with our expectations, despite weaker than expected industrial production in the second half. I am particularly pleased with progress in electric thermal solutions, where improvements to manufacturing throughput supported higher sales and improved margin." Mr Patel said the company was “well underway” with actions to simplify the organisation and better leverage resources to support future growth. He added: "Mindful of the outlook for industrial production, I remain confident in the execution of our strategy and in the strength of our business model.”

Government delivers support to UK car industry after pressure from manufacturers

The UK Government has announced a series of initiatives aimed at supporting the automotive industry amidst challenges posed by US tariffs and the transition to electric vehicles. Already lobbying for modifications to the electric vehicle mandate, the car sector was hit hard by the imposition of a 25% tariff on exports to the US. In response to concerns over potential job losses, the Government has introduced a range of measures designed to bolster this crucial sector. A key element includes easing the targets for electric vehicle sales, after Nissan highlighted that stringent goals could jeopardise the 'viability' of its UK presence, including its Sunderland plant. Prime Minister Sir Keir Starmer said: "Global trade is being transformed so we must go further and faster in reshaping our economy and our country through our Plan for Change. I am determined to back British brilliance. Now more than ever UK businesses and working people need a Government that steps up, not stands aside. "That means action, not words. So today I am announcing bold changes to the way we support our car industry. This will help ensure home-grown firms can export British cars built by British workers around the world and the industry can look forward with confidence, as well as back with pride. And it will boost growth that puts money in working people's pockets, the first priority of our Plan for Change." Business Secretary Jonathan Reynolds, said: "This pro-business Government is taking the bold action needed to give our auto sector the certainty that secures jobs, drives investment and ensures they thrive on the global stage. Our Industrial Strategy will back the country's high growth sectors, including advanced manufacturing, so we can grow the economy and deliver on the promises of our Plan for Change." In a move to support car manufacturers towards the 2030 target for ending the sale of petrol and diesel vehicles, changes have been made to the zero emission vehicle mandate that introduce increased flexibility during the transition period and extend the allowance for hybrid usage. Several smaller companies like McLaren and Aston Martin are set to benefit from exemptions within these targets. It has been reported that fines for manufacturers for each non-compliant vehicle sold will be lowered from £15,000 to £12,000. Nissan, which mainly exports its Sunderland-manufactured vehicles into Europe and therefore less susceptible to US tariffs, has revealed a trio of models—including the new generation Leaf, an all-electric Juke and the reintroduction of the Micra—all of which are expected to perform strongly in European markets. The company's recent publications showed a significant boost in its UK operations, with production scaling up to 325,000 vehicles and revenues climbing to £7.3bn in their 2024 accounts. Mike Hawes, CEO of the Society of Motor Manufacturers and Traders (SMMT) welcome the measures to support car manufacturers in the switch to electric vehicles as a '"really needed" step. Speaking on BBC Radio 4's Today programme, he said: "No one in the industry is denying that ultimately, we need to get to zero emission road transport but the underlying level of consumer demand just doesn't match those ambitious targets. It was a step that was really needed for this industry because the amount of pressure, financial pressure, that they're under from any number of global headwinds is severe at the moment." However, Robert Forrester, CEO of Gateshead-based listed motor retailer Vertu, said the Government's announcement "doesn’t really address the major issues". He said: “We have got 34 different global manufacturers and clearly the tariffs in the US have put most of those manufacturers under more pressure at a time when there was already pressure in the system. That’s why the Government has actually made this announcement. I’m not sure it actually goes far enough to address what will be quite significant issues in the years ahead. "The electric vehicle targets up to 2030 remain in place, the fines have been changed but it’s still a £12,000 fine for every petrol and diesel car up to 2030 that is sold above the zero emissions target - that’s billions of pounds to manufacturers - and manufacturers face a choice of either paying significant fines or rationalising petrol and diesel cars. Nothing has really changed here, this is real tinkering.

Eyewear firm monitoring Donald Trump's tariffs 'closely' as revenues fall

West Country-headquartered eyewear firm Inspecs says Donald Trump's tariffs are not expected to impact consumer demand and it is monitoring the situation "closely". The Bath-based company said its non-US-based businesses were not currently affected by the recent changes announced by the US President and that selective pass-through of cost increases would "largely mitigate" the situation. It also said it was focused on delivering operational efficiencies. Inspecs designs and manufacturers eyewear, frames and lenses, with many produced in countries such as China, which have been slapped with high tariffs by President Trump. The company only opened a new factory in Vietnam last year. "Notwithstanding the recently announced tariffs and caution in relation to market conditions, compelling new projects in the pipeline give us confidence in delivering on market expectations for 2025," said chief executive Richard Peck. In a set of unaudited preliminary results for the year ended December 31, 2024, Inspecs reported a group revenue decrease of 2% to £198.3m. Total operating expenses were reduced by 0.3% despite inflationary pressures, the firm said on Thursday, while underlying EBITDA - a measure of performance - reduced by 2.2% to £17.6m. Inspecs said it expected a "significant drop" in net finance costs in 2025 amounting to around £700,000 and that trading was in line with market expectations. "Inspecs demonstrated resilience in 2024 despite challenging macroeconomic conditions," said Mr Peck. "However, our continued focus throughout the year on the integration and simplification of our business has been significant. "We successfully got our new factory in Vietnam up and running, which has significantly improved our capacity. We also strengthened our brand portfolio by introducing several new brands and expanding our existing ones, all the while working on our supply chain and efficiencies. "Additionally, we have focused on growing our customer base in key markets. These strategic initiatives allowed us to improve our margins, maintain our administrative costs in an inflationary environment, and reduce our net debt, setting us up well for the future." Mr Peck said the first quarter of 2025 had "laid the groundwork" for a "pivotal" year for the company. He added: "As we move forward, the focus remains on sharpening efficiency, streamlining operations, and advancing key initiatives."