Alternative investment supporting the UK’s manufacturing industry

The manufacturing industry has faced numerous challenges over the last couple of years. With the coronavirus pandemic and Brexit to name a few, FDC explores how alternative debt funding can support the recovery of the industry.

Ongoing challenges

For over 3 years the UK has tried to persevere through what has been an increasingly turbulent time for many UK industries, none more so than firms operating within manufacturing supply chains. Waves of uncertainty that started with the decision for the UK to leave the EU, alongside the unprecedented challenges of 2020, many firms are coming face-to-face with new and complex pressures that need to be relieved if a business is to thrive and grow.

With political and economic changes falling on top of the inherent issues within the manufacturing sector, such as an aging workforce, key skills shortages, and production backlogs – the issues UK manufacturers face today have not been seen like this since the 70s*.

According to an S&P Global Manufacturing Survey**, 85% of British manufacturers have declared an increase in purchase prices, as well as increased energy costs as much as 80% higher than some other European countries. This, on top of stalling job growth, a sharp reversal in new orders and component shortages***, it is imperative that SME decision makers consider their future business growth plans and look to secure flexible investment.

Investing in supply chains

The medium-term outlook for UK manufacturers will be challenging, however considering and sourcing appropriate investment partners can alleviate some of the pressures.

There is a vast array of funding options for SME manufacturers in the UK, with asset-based lenders (ABLs), alternative fund managers and traditional banks all providing different packages with varying costs and risk tolerances. Taking the time to meet with fund managers, corporate finance advisors or accountancy firms specialising in sourcing capital for manufacturing businesses can be the first step to understanding what options are available in these demanding times and learn how an investor can provide “more than money.”

Partnering with SME lenders like FDC, many have extensive and established networks of talented and trusted professionals including Finance Directors, Managing Directors and sector specialists who can share knowledge and add real value to business plans.

FDC manufacturing investment

FDC understands that SMEs within the advanced manufacturing supply chain play a crucial role in delivering growth and competitiveness across the sector. As a trusted long-term partner, the FDC team has over 350 years of debt investment and industry experience, committed to drive innovation, job security and growth within the sector.

With c.£0.5bn under management, FDC is able to support SMEs operating within the manufacturing supply chain, with access to funds such as the National Tooling Loan Fund and the recycled Advanced Manufacturing Supply Chain Initiative (recycled AMSCI).

Advanced Manufacturing Supply Chain Initiative (Recycled AMSCI)

The recycled AMSCI Fund is open for new enquiries, supporting SMEs, innovators and suppliers within the advanced manufacturing supply chain who need debt investment to address market failures and support job creation.

“We understand the challenges manufacturing SMEs and suppliers face bringing innovation and R&D through to fruition. And with the recycled AMSCI we can provide flexible funding to support advanced manufacturing projects that would not otherwise continue.” – Diane Watt, FDC

National Tooling Loan Fund

The National Tooling Loan Fund is specialist funding available up to £2m for component manufacturers and toolmakers operating in England. It helps bridge the payment gap when new tooling is required for a confirmed order from an OEM.

FDC Debt Fund

And the FDC Debt Fund supports SMEs across the UK operating in any sector with investment up to £7.5m, offering flexible long-term funding for growth capital and shareholder transactions.

Businesses within the manufacturing industry play an important role in the UK economy and funding providers such as FDC can give them the financial assistance needed to push passed the difficulties created from the last few difficult years to help the industry succeed once again.

Diane Watt, AMSCI Investment Director comments: “Sourcing the right investment partner can be a challenging process especially for manufacturers working in turbulent times. However the right investment can be the catalyst that enables growth, expansion and security.

“We understand the challenges manufacturing SMEs and suppliers face bringing innovation and R&D through to fruition. And with the recycled AMSCI we can provide flexible funding to support advanced manufacturing projects that would not otherwise continue.

“Investment can be used to unlock growth potential as well as support job security, R&D, Capital Expenditure, and other project related costs.”

* CBI Industrial Trends Survey (Oct 21).
**S&P Global / CIPS UK Manufacturing PMI (May 22) – ***(Oct 22)

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