By Mark Johnston, Johnston Financial Solutions
New research published by Manufacturing NI, confirms what many businesses are already feeling on the ground: Northern Ireland’s manufacturing sector is under strain.
Despite contributing more than £16 billion to the economy through direct, indirect and induced impact, manufacturers are grappling with rising costs, sluggish productivity and an investment gap that threatens the long-term sustainability of the sector.
As a commercial finance broker working closely with manufacturing businesses across the region, at Johnston Financial Solutions we see these pressures first-hand. The Manufacturing and the Northern Ireland Economy report adds weight to what many already suspect - accessing the right finance, on the right terms, is becoming more complex and more critical.
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Rising costs outpace growth
Northern Ireland manufacturers now face the highest cost base in the UK. According to the report, 76% of turnover is absorbed by goods and material purchases, compared to 70% across the UK, and just 65% in Scotland. Employment costs now account for 19% of turnover, compared to 16% in the UK and just 12% in Wales.
At the same time, pre-tax profitability in manufacturing has fallen, driven by sharp increases in input and employment costs. This squeeze on margins leaves businesses with fewer reserves to reinvest, and a greater dependence on external finance.
The implication is clear: many manufacturers are now with limited retained capital for reinvestment.
Productivity gap puts pressure on investment needs
Northern Ireland’s manufacturers produce 22% less per job than the UK average, with output per hour at just 72.7% of the UK benchmark, the lowest across all regions. This means that in order to remain competitive, local firms must do more with less. The route to achieving this lies in automation, upskilling, and process efficiency - all of which require capital expenditure.
However, businesses facing tight margins and higher costs are often unable to self-fund the investments needed to close the productivity gap. Without well-structured finance packages, for machinery, digital transformation, robotics or expansion, many risk falling further behind.
At JFS, we are increasingly working with manufacturers to develop strategic finance plans that support investment without creating additional cash flow strain. In many cases, this includes asset finance, revolving credit, or unsecured lending to bridge critical gaps.
Regional exposure increases risk
Mid Ulster, Armagh City, Banbridge & Craigavon, and Newry, Mourne & Down are all highly dependent on manufacturing. In Mid Ulster alone, manufacturing accounts for 27% of council GVA and 19% of jobs. However, the same areas are most exposed to external shocks, particularly where a handful of large employers dominate the local economy.
According to the report, just 1% of manufacturing firms, typically those with 250+ employees, account for half the sector’s turnover and employment. These firms are not only critical to local supply chains, but also highly mobile and highly vulnerable to global cost pressures.
This concentration creates a finance risk: if one major employer struggles or exits the region, the knock-on effects can be severe. Businesses connected to these firms through contracts, property, staffing or logistics need to be prepared with contingency planning and agile finance.
Export performance slowing
While manufacturing still accounts for 47% of Northern Ireland’s total exports, the report shows a significant shift. While manufacturing still accounts for 47% of Northern Ireland’s external sales, this has declined in real terms since 2019.
This decline adds to the pressure. Manufacturers who previously reinvested export income into plant, equipment or hiring now face additional barriers. For firms that rely on international trade, having the right trade finance structures, currency risk strategies and working capital lines in place is now a necessity, not a nice-to-have.
Smaller firms losing ground
Perhaps most concerning is the reduction in micro-manufacturers. The number of firms with fewer than 10 employees has dropped by 100 in the past year alone, according to the data. These small manufacturers, often family-run and locally embedded, are facing increased cost pressures, and in our experience, many are struggling to access finance at the scale and flexibility they need.
At Johnston Financial Solutions, we support many of these SMEs in structuring finance deals that larger banks may overlook. Whether through mainstream banks, alternative lenders, peer-to-peer funders, or unsecured products backed by strong business plans, our role is to help these firms access finance that aligns with their growth stage and local market conditions.
What this means for financial planning
If you are a manufacturer or supplier operating in Northern Ireland, this report should serve as a strategic prompt. Now is the time to review your business model and ask:
Are your current finance structures designed to absorb rising costs?
Do you have access to capital for plant, technology or training investment?
Could you restructure existing finance to ease cash flow?
Is your business exposed to risks in your local manufacturing base or customer chain?
Are your financial forecasts and funding applications credible and lender-ready?
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At JFS, we offer no-obligation consultations to help you assess your options. We work with businesses of all sizes across the manufacturing spectrum, from engineering and fabrication to food production and advanced tech. Our job is not just to find finance, but to help you build a resilient structure that supports long-term success.
The message from this report is clear. Northern Ireland’s manufacturing sector is essential, but it is under pressure. Without access to the right finance at the right time, many businesses may struggle to survive, let alone thrive.
If your business is part of this ecosystem, the time to act is now.
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