Industrials: Opportunities for investors in high value, low volume UK industrial products 

Despite perceptions of the UK as a service-based economy, it remains one of the top 10 manufacturing nations in the world, with over £400bn in annual output. Whilst in recent years there has been more focus and more deals in industrial services, we are now seeing a renewed interest in UK industrial products from the PE community.  

There are good reasons for this:  

  • The UK has a comparative advantage in certain high-margin, high-demand sectors, such as advanced manufacturing, and high-value manufacturing with a strong focus on R&D  
  • There are a plethora of small businesses operating in the high value, low volume part of the market 
  • These businesses typically provide mission-critical products to sectors such as A&D, medical devices, and energy. Quality is crucial, and price is seldom a major purchasing factor due to (i) the mission-critical applications of these products and (ii) their low relative cost versus the overall product 
  • Often, additional services such as offering design elements further cement the crucial role of these firms for their customers 
  • Serving sectors such as healthcare and aerospace offer both growth opportunities and resilience against downturns. There is also plenty of demand for innovation in sectors such as automotive and energy 
  • Competition from low-cost manufacturing centres e.g. China tends to be low, as quality (rather than cost) is paramount, and high volumes are typically not required 

However, despite the opportunities, the sector is not without its challenges, which need to be fully understood before investment. These include:  

  • Skills gaps and access to talent 
  • The evolving role of technology 
  • Level of investment required in R&D to stay at the cutting edge 
  • Competition from comparable providers, both in the UK and Europe/US/Japan 

In the last few months, we’ve been helping our clients assess the opportunities and challenges in areas including semiconductor manufacturing, EMS, advanced composites and polymer solutions. 

Speak to a member of the team about opportunities in industrial products.

Matt McNally

[email protected]
+44 7894 736 523

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