Growth Opportunities in the UK Mechanical Engineering Sector

It’s a community that is vibrant, flexible and able to develop potentially transformative technologies for machinery manufacturing. As such, there is a considerable opportunity for SMEs to grow with the right investment that promotes innovation, new markets and access to emerging technologies.

The right strategy that takes advantage of new innovative approaches and developing market trends will help navigate the challenges of market competition, skill shortages and an ever-evolving regulatory environment.

SME Capital have supported a number of SMEs in the machinery, mechanical and industrial engineering sectors – specialists in areas such as precision engineering and structural engineering, vital businesses that boost the UK economy and ensure its manufacturing resilience.

While many SMEs continue to experience a struggle in accessing the right funding to invest and grow their businesses, with the right finance and growth capital in place, they can capitalise on the opportunities that the sector is forecasting.

SME Capital help SMEs with specialised long-term financial alternatives that allow them to invest and scale their business without worrying about the cash flow.

Below, we take a look at some of the growth opportunities for SMEs in the UK Machinery, Mechanical, and Industrial Engineering Sectors, and how funding can help.

Technological Advancements

One of the primary drivers of growth for SMEs in the UK's machinery and engineering sectors is the rapid pace of technological advancements.

The UK is currently in the midst of a significant transformation that rapidly changing the way we produce and engineer products, coined as ‘digitisation of manufacturing’. The enhancement of smart and autonomous systems fuelled by data and machine learning, is changing the mechanical engineering landscape.

Innovations in automation, artificial intelligence (AI), machine learning (ML), Big Data and the Internet of Things (IoT) are technologies that are transforming and reshaping how industrial processes are carried out and how engineers develop and design new equipment.

Technology is creating increased opportunities for mechanical engineers to design and introduce (NPI) improved products and adapt them to the changing demands of customers.

SMEs that embrace this evolution and adapt to these technologies can streamline operations, reduce costs, and increase productivity.

Internet of Things (IoT)

Specifically looking at IoT, one of the most significant changes in mechanical engineering is the way mechanical products are developed, prototyped, and manufactured. There is a shift away from mechanical systems to more software and data-driven tools both at the design stage and application level with a connection directly to the internet.

Many product iterations are carried out on-screen via computer-aided design and simulation, ensuring more efficiency and accuracy using field data. In the future, we’re likely to see more IoT-driven intelligent devices that can communicate with their original equipment manufacturer (OEM) after they’ve left the manufacturing line.

As a result, mechanical engineers can easily identify and potentially solve common issues and make improvements, a lot faster, all whilst working remotely.

Research suggests that the number of IoT devices online will rise to 75 billion by 2025.

A future mechanical engineer must be ready for a new age of simulations and integrated design processes, both of which will make workflows more streamlined. UK SMEs need to be aware of this new tech and make sure they make the right investments.

Paving the way for sustainability

The global shift towards sustainability and environmentally friendly practices presents a substantial growth opportunity for SMEs in the machinery and industrial engineering sectors.

Developing green technologies, such as energy-efficient machinery and waste reduction solutions, aligns with what's happening in all industries and the expectations of customers, also opening up new markets and funding opportunities.

In the coming years, there will also certainly be an increase in the demand for renewable energy technologies. The shift towards more sustainable practices is becoming more common, with solar and wind energy being used more than other sustainable sources.

Therefore, the future of mechanical engineering may revolve around investment in developing new machines to assist in the manufacturing of parts such as solar cells or semiconductor wafers.

Export and International Markets - Collaboration and Partnerships

The UK has a strong reputation for engineering excellence, and this reputation extends globally.

SMEs in machinery and mechanical engineering can leverage this reputation to access international markets. Exporting products and services can significantly expand a company's customer base, leading to sustained growth.

Collaborations with research institutions, larger corporations, and other SMEs can provide invaluable resources and expertise. Joint ventures or partnerships can lead to shared research and development costs, access to new markets, and the potential for co-developing innovative products or solutions.

Investment in opening up these channels requires careful consideration and the appropriate capital.

Challenges to this?

While the Brexit hangover and COVID-19 Supply Chain Disruptions have cleared somewhat, trade barriers, rising costs and regulatory changes continue to add complexity and possible costs to businesses.

Flexibility, adaptability, and strategic planning remain core to the success of future investment in SMEs in these sectors.

Access to funding is also key.

Like with all UK SMEs across all sectors, accessing the right type of funding, at the right time, that’s right for an individual business – has become significantly challenging as banks retrench bank loans for SMEs.

The growth of SME business in the UK's Machinery, Mechanical, and Industrial Engineering Sectors mainly depend on the proper funding for development and acquisitions. It points out the necessity of taking debt capital to encourage financial growth strategies.

Government support programmes for SMEs and sector specific funds from VC’s have lessened of late, resulting in businesses looking at the more traditional routes of applying with their bank for debt capital business loans or taking on outside investment in exchange for equity.

But with more banks now rejecting SME business loans and business owners reluctant to give up shares, alternative debt lenders are now primed to help SMEs access capital outside of traditional lending institutions.

Taking on debt capital can help SMEs finance growth strategies that take advantage of the opportunities in the sector. With the right debt capital injection, businesses can scale-up and get growth-ready.

At SME Capital, we help SMEs with specialised long-term financial alternatives that allow them to invest and scale their business without worrying about the cash flow.

We are experts in this field, and our priority is to become your long-term funding partner and develop trusted relationships so that nothing can stop you from meeting success under the changing market scenarios.

We are here because we firmly believe that our specifically designed finance solutions for UK companies, which will aid in your growth and success, represent a better option.

As experts in SME lending, every customised loan we make for you will be designed especially with the goal of becoming your long-term finance partner.

Whether you need financing for a refinance, succession planning, M&A, or growth and expansion, we give you the opportunity to thrive without asking you to give up control, equity, or personal assets.

SME Capital uses a cash flow-based approach to lending, offering a multiple of business profitability, specifically EBITDA, as opposed to a loan amount being directly tied to the value of specific assets.

We can provide an economic solution to consolidate smaller lenders, or refinance expensive short-term loans, while providing additional working capital for the business.

With repayment terms from 3 to 7 years and flexibility on repayment structures SME Capital is an effective, relationship-led, refinance solution for qualifying businesses in any sector that have been trading more than 3 years with £250,000+ EBITDA.

About SME Capital

SME Capital was founded to support the growing number of SMEs who face difficulty or frustration in accessing capital through traditional methods. We understand the importance of real and trusted relationships in the SME lending market and have dedicated Regional Directors based across the UK.

By combining traditional lending expertise with the latest in data analytics, we are supporting established UK SMEs with their long-term objectives and business ambitions.

View our portfolio

Growth Opportunities for SMEs in the UK Machinery, Mechanical, and Industrial Engineering Sectors.