
The UK sub-contract manufacturing market is hoping for a more positive outlook in 2025 following a disappointing 12 months. According to the latest Contract Manufacturing Index (CMI) data, levels of business were significantly down overall compared to the previous year – falling sharply after the Budget at the end of October. Overall the market was down 23% on 2023.
After a strong first quarter, coming off the back of a strong end to 2023, the market dipped in the second quarter due to uncertainty in the market over the coming General Election. There was a boost in confidence and optimism following the election which saw the market rally in July. Activity then stalled after the Budget as companies put projects on hold due to concern about increased costs.
On a positive note, there are indications that the market has picked up in the first month of 2025.
The average contract manufacturing index (CMI) for the year was 59 compared to 77 in 2023. The CMI for October was 62 and this fell to 39 in November and 27 in December.
The CMI is produced by sourcing specialist
Qimtek and reflects the total purchasing budget for outsourced manufacturing of companies looking to place business in any given month. This represents a sample of over 4,000 companies who could be placing business that together have a purchasing budget of more than £3.4 billion and a supplier base of over 7,000 companies with a verified turnover in excess of £25 billion.
The baseline for the index is 100 which represents the average size of the sub-contract manufacturing market between 2014 and 2018. Within the overall figures, machining represented 49% of the market, with fabrication on 44% and other processes such as moulding and assembly making up the remaining 7%. These proportions remained relatively consistent over the course of the year.
The largest market sector by far was industrial machinery, followed by construction, food and beverage, defence and electronics. Compared to other sectors, industrial machinery weathered the poor market conditions relatively well, falling just 5% compared to a 23% drop for the market as a whole. It was also the strongest sector in 2023.
Qimtek owner Karl Wigart said: “The last two quarters of the year were pretty poor, which I feel was mainly due to the Budget in the autumn. This caused a lot of uncertainty in the engineering market. Buyers were delaying their new projects to see what the budget would bring and how the market would respond. We have also done some research on overall trends and it is obvious that the first quarter is the busiest for buyers of custom-made parts and we are seeing activity picking up during this first month of 2025.”