UK manufacturers reported a 28% rise in active AI use since 2025, according to the latest twice-yearly Manufacturing Outlook report from Crowe and The CBM. The survey, conducted in June and July 2026, found that 57% of respondents had adopted AI and another 23% were trialling it, putting the combined share at 80%. In Spring 2025, 52% reported AI adoption. The article also says Prime Minister Andy Burnham has made re-industrialisation and stronger manufacturing central to the government’s agenda.

Manufacturing produces around £220 billion in annual UK output, accounts for 42% of exports and almost half of business R&D spending, and supports approximately 2.6 million jobs. More than three-quarters of survey respondents had adopted or were actively trialling AI. Nearly three-quarters were engaged in or exploring defence manufacturing, amid increased defence spending, geopolitical uncertainty and greater emphasis on UK-based industrial capacity. Rising operating costs were the biggest barrier to growth over the next 12 months, cited by 57% of respondents.

Richard Fallon, CEO of The Technology Supply Chain, said higher employer National Insurance Contributions, the minimum wage and energy costs make it difficult for manufacturers to compete. He said members were seeking university support to reduce energy use and using AI to improve efficiency and cut costs. The report also identified shortages of qualified job applicants and the need to transfer knowledge as an ageing workforce retires. It said succession planning is becoming as important as recruitment, while AI may help employees focus on higher-value work.

Survey respondents described AI use in engineering, operations and decision-making, including design requirements, toolpath optimisation, quality analysis and warranty data trends. Geoff Archenhold, CEO of Integrated Systems Technologies, said his company now iterates concepts, evaluates designs and generates test code in hours rather than years. He reported a measured 10x to 20x productivity gain, while engineering judgement remained responsible for every design decision.

The report said UK businesses may claim R&D tax relief for AI adoption when a project creates a scientific or technical advance. In the previous 12 months, 37% of respondents had successfully claimed the relief; the survey did not record how many claims involved AI. Among respondents who had not submitted a claim, 21% said they lacked qualifying activity, 18% did not know they might be eligible, 11% cited compliance or risk concerns, and 12% said the process was too complex. Crowe UK partner Paul Cox said awareness and confidence remained barriers, while a shift toward supporting genuine innovation could give manufacturers a reason to reconsider claims as they invest in AI, automation and process improvement. The article concludes that the survey points to technology adoption alongside persistent difficulty recruiting skilled workers, and argues for faster expansion of retraining and apprenticeship schemes.

UK manufacturers reported a 28% rise in active AI use since 2025, according to the latest twice-yearly Manufacturing Outlook report from Crowe and The CBM. The survey, conducted in June and July 2026, found that 57% of respondents had adopted AI and another 23% were trialling it, putting the combined share at 80%. In Spring 2025, 52% reported AI adoption. The article also says Prime Minister Andy Burnham has made re-industrialisation and stronger manufacturing central to the government’s agenda.

Manufacturing produces around £220 billion in annual UK output, accounts for 42% of exports and almost half of business R&D spending, and supports approximately 2.6 million jobs. More than three-quarters of survey respondents had adopted or were actively trialling AI. Nearly three-quarters were engaged in or exploring defence manufacturing, amid increased defence spending, geopolitical uncertainty and greater emphasis on UK-based industrial capacity. Rising operating costs were the biggest barrier to growth over the next 12 months, cited by 57% of respondents.

Richard Fallon, CEO of The Technology Supply Chain, said higher employer National Insurance Contributions, the minimum wage and energy costs make it difficult for manufacturers to compete. He said members were seeking university support to reduce energy use and using AI to improve efficiency and cut costs. The report also identified shortages of qualified job applicants and the need to transfer knowledge as an ageing workforce retires. It said succession planning is becoming as important as recruitment, while AI may help employees focus on higher-value work.

Survey respondents described AI use in engineering, operations and decision-making, including design requirements, toolpath optimisation, quality analysis and warranty data trends. Geoff Archenhold, CEO of Integrated Systems Technologies, said his company now iterates concepts, evaluates designs and generates test code in hours rather than years. He reported a measured 10x to 20x productivity gain, while engineering judgement remained responsible for every design decision.

The report said UK businesses may claim R&D tax relief for AI adoption when a project creates a scientific or technical advance. In the previous 12 months, 37% of respondents had successfully claimed the relief; the survey did not record how many claims involved AI. Among respondents who had not submitted a claim, 21% said they lacked qualifying activity, 18% did not know they might be eligible, 11% cited compliance or risk concerns, and 12% said the process was too complex. Crowe UK partner Paul Cox said awareness and confidence remained barriers, while a shift toward supporting genuine innovation could give manufacturers a reason to reconsider claims as they invest in AI, automation and process improvement. The article concludes that the survey points to technology adoption alongside persistent difficulty recruiting skilled workers, and argues for faster expansion of retraining and apprenticeship schemes.