A significant strategic shift is underway in the South West's manufacturing sector, with a wave of mergers, acquisitions, and fresh investment planned for 2026. This is according to a major new industry report which reveals boards are moving from a defensive to an offensive stance.
Strategic Moves: M&A and Investment Take Centre Stage
The report, 'The Manufacturing Agenda' from advisory firm FRP, surveyed senior decision-makers across the region. It found that nearly two in five (38%) expect their boards to lead sell-side merger and acquisition (M&A) activity within the next twelve months.
Alongside consolidation, companies are planning substantial new investments to bolster their operations. The primary focus areas for this capital expenditure are:
- Enhancing digital or automation capabilities (49%)
- Addressing critical skill and talent shortages (48%)
- Supporting buy-side M&A activity (47%)
Overcoming Challenges and Aligning Priorities
This proactive agenda follows a difficult period where manufacturers were preoccupied with managing supply chain disruption, severe margin pressure, and unplanned cost spikes. For 2026, boards will also prioritise managing cashflow and working capital (36%) and advancing sustainability, ESG compliance, and decarbonisation (35%).
Encouragingly, the report identified strong alignment between the priorities of manufacturing boards and their potential financial backers. Lenders and investors cited cost and cashflow management (44%), investment in automation and digital execution (41%), and leadership resilience (37%) as key factors that would prompt intervention in a portfolio company.
Expert Insight: Building a Compelling Case for Investment
Matt Whitchurch, a financial advisory partner at FRP in Bristol, commented on the findings. He stated that the focus on major strategic steps like sell-side M&A shows that "manufacturing resilience is no longer purely defined by financial strength – it’s about anticipating and addressing capability gaps."
He added: "Next year, many South West manufacturers will be seeking new funding to support their strategies and investment ambitions, and it’s encouraging to see broad alignment between board and lender priorities." Whitchurch concluded that boards which understand lenders' focus on operational fundamentals like cashflow, and which have the right advisory support, will be best positioned to secure new investment.
The data paints a clear picture of a sector in transition. South West manufacturers are pivoting from survival to growth, using M&A and targeted investment in technology and people to build competitive advantage for the future.
