Craig Burton
Partner
Feeling the pressure? You’re not alone
If your day starts with a supplier chasing payment and ends with you wondering how to protect your margins, you’re not the only one.
Raw materials are getting more expensive. Labour costs are rising. Not to mention energy, packaging and transport, nothing’s staying still and if you’re heading into a busy production period, it can feel like there’s no time to stop and take stock.
The start of a new year is always a good time for a quick review which can unlock ideas that make a real difference.
In this article, we discuss what manufacturers are doing to manage rising input costs, regain control and build for the future.
How to reduce manufacturing costs: practical steps
Manufacturing overheads and input costs can put pressure on every part of the operation. But there are ways to take control.
Buy in bulk when it makes sense
Increasing order volume for key components can protect margins from further price increases. Yes, it means you have more money tied up in stock but if you have the liquidity and space, it can be a simple move that brings stability.
Rethink supplier relationships
Long-standing suppliers may be open to revised terms if you ask. In some cases, businesses are switching to local providers to decrease freight charges as well as reduce risk and gain flexibility.
Be strategic with price increases
Raising prices across the board rarely works. But being selective can. Reviewing the product range, understanding where the strongest margins lie, and adjusting accordingly can help recover some of the gap.
Invest in efficiency, even in small ways
Several firms are turning to low-cost digital tracking to spot downtime and bottlenecks. Others are investing in process improvements that reduce scrap or rework. These don’t have to be major overhauls. They can be small, smart adjustments.
How do you plan when everything keeps changing?
That’s one of the most common frustrations I hear. But even a simple cashflow forecast can change how you make decisions. You do not need complicated tools. Just a clear view of what’s coming over the next few months.
I would describe this as switching the headlights on. You are still on the same road, but now you can see the obstacles in time to steer around them. When you can see what’s coming, you can act. When you cannot, you are reacting under pressure which can lead to poor decisions.
Are you missing support that could ease the pressure?
Many manufacturers I speak to assume they are too small for funding or tax reliefs. But that’s rarely the case.
R&D Tax Relief
If you’ve made improvements to a product, adapted a process, or worked through technical challenges, you may qualify for R&D tax relief. You do not need to be in a lab. You just need to be solving problems others cannot, although obtaining the relief from HMRC has become more difficult in recent years.
Capital Allowances
If you’re investing in new kit, improving premises, or upgrading vehicles, capital allowances can help reduce your tax bill and free up cash.
Grants and business support
There are often regional grants and sector-specific funds available, especially for automation, sustainability, and training. You might be surprised at what’s available, but it moves quickly. The sooner you check, the better.
Can we come out of this stronger?
Yes, and some are already doing just that.
We’ve seen firms:
- Reshore key processes to reduce supply chain risk
- Introduce digital job tracking for better workflow visibility
- Upskill internal teams to reduce reliance on contractors
- Improve layout and reduce movement across the factory floor
- Switch to more energy-efficient equipment to cut running costs
These changes are not always dramatic, but they build resilience which is often what keeps good businesses growing when others slow down.
Quick wins we’ve seen work
🛠️ Five things worth checking:
- Are you still reordering materials on autopilot, or could you renegotiate terms?
- Have you looked at your last six months of stock usage? Is anything over-ordered?
- Could a rolling cashflow forecast help you anticipate cash gaps earlier?
- Have you recorded process improvements for a potential R&D claim?
- Are you aware of any grants or funding options linked to your next investment?
These are simple checks. But they can save thousands when applied at the right moment.
A final word from me
‘All manufacturers I speak to are constantly under pressure. But the firms that stop and take a closer look, even if just for half an hour, can usually find a few levers they hadn’t spotted before.
You don’t have to change everything. But a small step in the right place can buy time, free up cash, or unlock growth.’
Craig Burton, Manufacturing Partner at Hawsons
Common questions we hear from manufacturing MDs
What are the main cost pressures facing UK manufacturers as we go into 2026?
Rising input costs include raw materials, energy, labour, packaging, and transport. Combined with supply chain volatility and skills shortages, these factors are squeezing margins across the board.
What steps can manufacturers take to manage rising costs?
Strategies include bulk buying, reviewing supplier terms, process improvements, cost engineering, and selective price increases. Financial forecasting and exploring tax reliefs and available grants can also ease cashflow pressure.
How can forecasting help reduce manufacturing overheads?
Forecasting gives better visibility of future costs, allowing you to plan, budget, and adjust before problems become urgent. It supports more confident decision-making and reduces risk.
Do UK manufacturers qualify for R&D tax relief?
Many do, even if they don’t realise it. If you’re solving technical problems, adapting processes, or developing new products, it’s worth checking eligibility.
We're here to help
Hawsons has a dedicated team of specialist manufacturing and engineering accountants in Sheffield, Doncaster and Northampton.
Our specialist team offers a wide range of services which are tailored to meet your individual needs. Our understanding of the issues faced by the manufacturing and engineering businesses means that we can proactively seek out ways for you to maximise your profitability and minimise your tax liabilities.
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