At a Glance: Manufacturing Resilience
- The Core Risk: De-industrialisation in the UK is driven by rising energy costs, supply chain fragility, and skills shortages, threatening the long-term viability of local manufacturing.
- Resilience Strategy: Successful firms are transitioning from “Just-in-Time” to “Just-in-Case” models, prioritising supply chain diversification and local sourcing.
- Risk Mitigation: Robust insurance programs, including Business Interruption and Supply Chain covers, are essential to protect against macro-economic shifts.
- Pro-Tip: Investing in green technology and automation not only lowers long-term energy costs but also builds “future-proof” operational efficiency.
The recent warning from Make UK that Britain risks de-industrialisation has struck a chord with manufacturers nationwide. Rising business taxes, surging energy costs and falling investment confidence are creating a difficult environment for the industrial economy.
The recent report that UK manufacturing output fell by 1.7% in September 2025, with a yearly decline of 2.2%, and especially large falls in sectors such as motor vehicles (-28.6 %) and transport equipment (-13.8 %), is significant.
At McClarrons, we work with manufacturing businesses to help them build resilience through tailored commercial insurance. While economic policy and taxation sit beyond a business’s control, strategic insurance planning can be the difference between resilience and retreat, should an unexpected incident occur.
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The Pressures Facing UK Manufacturing
Make UK’s recent analysis highlights several pressures now converging on the sector. Manufacturers are grappling with higher fixed costs driven by increased business taxation and employer National Insurance contributions, while simultaneously facing margin compression due to energy and raw material price volatility.
This financial squeeze has led to cash flow strain for some, forcing many businesses to postpone critical investments and manage cash with extreme caution. When combined with supply chain instability and persistent skills shortages, these forces risk weakening the UK’s industrial base. In such circumstances, unexpected incidents and resulting claims can be even more detrimental to a business than usual.
Insurance as a Strategic Tool for Resilience
The following policies are central to a modern manufacturer’s resilience plan:
1. Business Interruption & Supply Chain Insurance
Generally, when production halts, overheads continue. Business Interruption (BI) cover can help ensure essential costs and income are protected while operations recover.
2. Machinery Breakdown & Engineering Inspection
Deferred maintenance, ageing equipment or machinery error can lead to costly breakdowns. Machinery Breakdown insurance can cover repairs or replacements, and regular inspections can help to minimise downtime while maintaining compliance with statutory regulations.
3. Trade Credit Insurance
Financial strain across supply chains heightens the risk of bad debt. Trade Credit insurance helps safeguard your receivables and stabilise cash flow by protecting against non-payment or customer insolvency.
4. Management Liability
In difficult times, directors can face increased scrutiny over decisions involving cost reduction, redundancies or restructuring. D&O cover can help to protect leadership by funding legal defence and settlements in the event of allegations or regulatory claims. allegations or regulatory claims.
5. Property & Asset Insurance
Operational changes, such as mothballing machinery, reducing output, or partially closing a site can alter risk profiles and insured values in ways that are not always immediately obvious. If insurance arrangements are not reviewed, this could lead to restrictions in cover or reduced claim settlements. McClarrons can help by working with you to ensure your property schedule and declared values remain accurate, preventing the disastrous financial consequences of underinsurance during a claim.
6. Cyber & Digital Risk Insurance
Digital reliance continues to grow, yet legacy systems are increasingly vulnerable. Cyber insurance is key for helping to protect against ransomware and data breaches, often providing not only financial compensation but also access to expert forensic and recovery teams to get production back online.
A Practical Checklist for Manufacturers
| Challenge | Potential Exposure | Insurance Response |
| Rising business costs and tax burdens | Reduced cash flow, limited reserves | Review BI sums insured and indemnity periods |
| Deferred maintenance | Equipment breakdown and safety risks | Machinery Breakdown & Engineering Inspection |
| Customer insolvency | Cash flow disruption | Trade Credit insurance |
| Operational restructuring | Policy misalignment | Mid-term policy review and insurer disclosure |
| Director accountability | Increased scrutiny on decision-making | Management Liability Insurance |
| Cyber dependency | System downtime or data breach | Cyber insurance with response and recovery cover |
Partnership Beyond Policy
We work alongside manufacturers of varying size, from precision engineers to large-scale producers, helping them stay protected and competitive through intelligent insurance solutions.
Our team conducts comprehensive risk audits to review exposure across operations, helps you assess your potential business interruption exposures and supply chain scenarios, and will compare policy wordings to help eliminate potential gaps in your existing cover while putting forward a solution that will meet your business’s requirements and priorities.
We aim to align your insurance cover with your financial and operational plans and negotiate tailored terms with insurers who understand manufacturing. This collaborative, long-term approach helps ensure your business remains resilient, compliant and confident, even in volatile markets.
If you would like a thorough review of your business insurance, please contact our Commercial Insurance Team on 01653 609151 or at commercial@mcclarroninsurance.com. If you’d prefer, you can fill out the form below.
