July 2, 2025 Why UK Manufacturers Need Partners, Not Just Investors

UK manufacturers must shift from short-term funding to strategic capital partnerships to drive innovation, resilience, and long-term growth.

By James Crayton, Partner and Head of Commercial at Walker Morris

UK manufacturers today find themselves navigating an increasingly turbulent and uncertain trade environment. Market volatility, shifting policy landscapes, rising input costs, and an ongoing deficit of essential skills create significant barriers to growth.

Indeed, our latest survey at Walker Morris confirms this, with 44% of UK manufacturing leaders acknowledging that achieving their transformation goals is only partially possible without external capital and expertise. A third (33%) also stated that board-level governance is another transformational skill they lack.

While the UK has strong engineering expertise, world-class universities, and a proud manufacturing heritage. There is a risk of falling behind countries like Japan and China in strategic investment and innovation.

What British manufacturing needs now usually isn’t simply more cash, but strategic capital – often in the form of private equity (PE) investment provided in partnership with those who understand the business landscape and growth ambitions.

UK manufacturing’s new investment landscape

UK manufacturing and supply chain operations have weathered volatility in recent years. Brexit’s lingering uncertainties, ongoing US-China trade tensions, soaring inflation, and geopolitical instability have created a uniquely challenging environment.

Manufacturers adapted quickly to disruptions, whether changing tariff structures or supply disruptions created by COVID-19. The pandemic demonstrated how agile businesses can become under pressure, accelerating technology adoption and pushing manufacturers towards rapid, sustained transformation.

However, achieving sustainable, resilient growth demands an understanding of broader macro trends reshaping manufacturing and supply chains. Increasingly, manufacturers are considering reshoring and nearshoring strategies to shorten supply chains and shield operations from global turbulence and rising input costs. Calls for localisation have intensified due to pressures around decarbonisation and environmental, social, and governance (ESG) considerations, as businesses strive toward more sustainable, transparent, and responsible practices.

Recent crises have reinforced valuable lessons around the importance of agility and resilience. The pandemic, in particular, highlighted how rapidly companies can implement technological shifts when under pressure. These disruptions also allow manufacturers and supply chain leaders to refocus and push growth from factors within their control.

Managing these challenges effectively requires investment approaches beyond short-term ROI finance models. UK manufacturers are embracing strategic partnerships and investments that help close critical capability gaps and support lasting resilience to avoid falling behind global leaders and maximise our inherent strengths.

The concept of strategic capital

In manufacturing, strategic capital entails investment combining financial backing with deep industry insight, operational support, technology partnerships, and network access. It relies on collaborative relationships between manufacturers and experienced partners, including private equity and corporate investors.

Far from its old image as solely profit-extractive, private equity today is focused on building and adding value. Investors spot talented teams already delivering strong results and partner with them to unlock further growth. With proven expertise and interests aligned with businesses they support; PE investors share valuable experience gained in navigating similar challenges in other investments.

Similarly, corporate investors can offer critical resources like technology know-how, industry relationships and strategic guidance. In essence, at its best, strategic capital provides manufacturers with more than just funding. It equips them with the connections, insights, and capabilities to build resilience, accelerate innovation, and boost the UK’s manufacturing prowess.

Structuring investor relationships

While strategic capital can unlock growth, manufacturers must safeguard their long-term interests through carefully structured legal frameworks. Private equity and corporate investors aren’t necessarily always looking to take controlling stakes. They want potential partners to steer the ship while providing backing for scale, resilience, and to drive growth.

To achieve this alignment, carefully drafting shareholder agreements and setting out governance controls, exit terms, and shared strategic goals are critical. Joint ventures or partnership agreements also require focus on intellectual property rights, governance structures, and carefully defined liabilities. Additionally, with ESG and evolving regulatory obligations becoming increasingly central, manufacturers must incorporate clear responsibilities into legal arrangements from the outset.

Common pitfalls manufacturers face include misaligned incentives or succumbing to short-term thinking imposed by financial investors. They can mitigate these risks through early alignment with investors, transparent communication, and tailored legal agreements that reflect a shared vision for sustainable long-term growth.

Futureproofing through resilient operating models

To build resilience, UK manufacturers and supply chain leaders are deploying tactics such as supplier diversification, developing regional and local supply hubs, and investing in workforce retraining. Above all, the rapid acceleration towards automation and digital infrastructure, driven by global competition and workforce volatility, has become essential.

Previously reserved for high-level tasks, automation increasingly permeates everyday operations, reducing downtime, human error, and dependencies on vulnerable labour resources. These shifts also require significant commitments to workforce development and retraining. Manufacturing is no longer just “metal-bashing” – it’s programming, robotics, and digital innovation.

Your next automation investment will likely be substantial and long-term. Are you confident you’re committing to the right technologies and solutions? Seeking strategic investor relationships can provide essential checks and balances, enabling you to avoid costly mistakes like opting for the “BetaMax equivalent” of automation technology.

Choosing the right partners

When sourcing investment and legal partners, strategic alignment, cultural and operational fit, and long-term value before short-term returns are key. Look for partners who share your vision for transformation and can actively support your growth ambitions. With proactive adaptation and robust legal frameworks, manufacturers can confidently embrace strategic investors as champions invested in their future competitiveness.

For many UK manufacturers, the time to transition from transactional funding to strategic capital partnerships is now. Britain already possesses an enviable industrial base and impressive talent pipeline. What’s needed is a clear vision and the right partnerships to realise this potential. Rather than simply surviving volatility, manufacturing leaders can use it as a springboard for smarter investment.

Navigating this transformation successfully demands specialist legal and commercial expertise, like that provided by Walker Morris, to secure partnerships grounded in long-term strategic alignment. To win the battle, manufacturers and supply chain leaders must evaluate their investment approach, engage trusted advisers, and seek partners dedicated to sustainable transformation.

About the Author:
James Crayton is a Partner and Head of Commercial at Walker Morris; he also leads the firm’s Manufacturing sector. A leading commercial contracts lawyer, James specialises in drafting and negotiating the agreements that support his clients’ most strategic commercial relationships.

James is trusted by clients across a wide range of sectors to get key deals right and make complicated agreements work, and he has built a team capable of dealing with the full gamut of commercial contracts work. This ranges from business-as-usual documents like terms and conditions of sale or purchase, through to the agreements that get products and services to markets like distribution, agency and logistics contracts. James also works on the most complicated and important commercial deals that may only come around once or twice a decade.

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