Remember this time last year, when leaders across the manufacturing sector quietly repeated the mantra “survive till 2025”? Fast forward to today and, while survival remains a focus, manufacturers face a new wave of challenges: compounding export issues, persistent skills shortages, rising operational costs, and mounting regulatory pressures.
Grenke’s recent New Lease of Life report — which explores the role of leasing for UK SMEs — revealed that 57% of manufacturing firms identify access to finance as a core business challenge. Yet, at the same time, 74% believe that new assets and equipment would reinvigorate their operations and support long-term growth.
Despite this, just 43% of manufacturers currently lease equipment. This raises a critical question: are manufacturers making the smartest use of their financing options? Could leasing be the key to unlocking innovation, improving productivity, and ensuring businesses are investing in a sustainable, competitive future?
The Current SME Manufacturing Landscape
Navigating economic uncertainty and fluctuating market conditions is an ongoing reality for today’s SME manufacturers. When we examined the specific factors holding back growth in the sector, our report found:
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87% of manufacturers flagged energy costs as a concern (vs. 73% national average)
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77% cited supply chain issues (vs. 54% national average)
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75% reported less or unpredictable customer demand (vs. 70% national average)
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72% highlighted commercial rent and rate increases (vs. 62% national average)
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66% stressed the need to replace outdated equipment (vs. 57% national average)
This paints a clear picture: manufacturers are facing intense pressure on multiple fronts.
The report also identified the areas where businesses have fallen behind over the past year due to a lack of investment:
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40% have delayed expanding into new markets
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32% have stalled hiring plans
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28% have postponed investing in essential equipment
Yet, despite these obstacles, 57% of manufacturing firms remain optimistic about growth opportunities — a notably higher figure than the 51% national average. The question is, how can the sector turn this optimism into action?
The Big Efficiency Barrier in Manufacturing
One major roadblock emerged from our research: 54% of manufacturers currently operate with suboptimal equipment. Breaking this down:
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15% of equipment is no longer functional or in use
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38% is adequate but outdated and due for an upgrade
In other words, over half of UK manufacturers are chasing growth using equipment that simply isn’t fit for purpose. This restricts not only operational efficiency but also innovation, employee productivity, and customer satisfaction.
While some operational strategies — like market expansion and recruitment — are hindered by limited financing, the often-overlooked consequence of using sub-par equipment is significant. The opportunity cost of not upgrading can quietly erode a business’s competitive edge.
Why Finance Leasing is a Smart Growth Strategy
If leasing offers manufacturers the opportunity to access the latest technology and equipment — ensuring they remain responsive to evolving market demands — why aren’t more businesses embracing it? Particularly in manufacturing, where equipment rapidly becomes obsolete, finance leasing could be a cost-effective and strategic alternative to large upfront investments.
At Grenke, we believe leasing is no longer just a financial option. It’s a strategic enabler that can help manufacturers future-proof their operations and manage growth sustainably.
Key Benefits of Leasing for UK Manufacturers:
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Aligns with long-term business goals
Leasing supports objectives such as sustainability initiatives, new product development, and competitive differentiation — while preserving cash flow and avoiding significant upfront expenses. -
Improves cost management
With predictable payment structures, manufacturers can access cutting-edge equipment while managing operational budgets more effectively. -
Enables tailored flexibility
Whether upgrading a production line or investing in energy-efficient technologies, leasing allows businesses to match asset investments with evolving priorities and market conditions. -
Provides comprehensive managed solutions
Built-in maintenance and upgrade options within leasing contracts mean less downtime and lower maintenance overheads, offering peace of mind and operational consistency. -
Supports sustainability goals
As sustainable manufacturing and eco-friendly production equipment rise in importance, leasing offers a practical route to adopting greener technologies without heavy capital expenditure.
Debunking the Myths Around Finance Leasing
Encouragingly, our research shows that the manufacturing sector is increasingly open to the possibilities leasing offers:
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30% of manufacturers are excited about the growth potential of leasing
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60% expressed interest
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Only 8% remain sceptical, while 2% are unfamiliar with leasing options
By comparison, across all SMEs, just 23% are excited and 61% interested — demonstrating manufacturing’s relatively progressive outlook.
However, barriers to adoption persist. The top concerns preventing businesses from leasing more equipment include:
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32% worry about maintenance and servicing arrangements
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32% are unclear about the overall cost impact
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25% feel they lack leasing knowledge and experience
It’s crucial for finance providers to address these knowledge gaps and make the leasing process more transparent and accessible.
The Real Cost of Not Investing
Ultimately, manufacturers must ask themselves: what is the true cost of not investing? Can your business afford to risk falling behind competitors by clinging to ageing, inefficient equipment?
The gap between the appetite for leasing and actual adoption is narrowing — and at Grenke, our mission is to close it. We’re committed to supporting UK manufacturing growth by making leasing solutions clearer, more flexible, and more aligned with today’s fast-changing business environment.
Final Thoughts
Finance leasing in manufacturing isn’t just about spreading costs. It’s about enabling innovation, improving operational efficiency, and positioning your business for sustained, long-term growth.
At Grenke, we’re here to help manufacturers unlock new opportunities, optimise their asset management, and future-proof their operations. The manufacturing sector is ready for a new lease of life — and leasing could well be the key.
