Welsh SME manufacturers rank fifth in UK regional study

Daniel Bevan - Editor

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Wales has been ranked the fifth-best performing region in the UK for small and mid-sized manufacturers, according to a new study of the sector.

Manufacturers in Wales retain an average of 34p for every £1 generated, narrowly ahead of the UK average of 33p. Profit margins rose from 31% in the fourth quarter of 2025 to 34% in the first quarter of 2026.

The figures come from Unleashed’s Regional Manufacturing Growth Powerhouse Report, which analysed operational data from 1,322 SME manufacturers using its inventory management software during the first quarter of the year.

The study ranked 12 UK regions based on five measures: sales revenue, lead times, profit margins, stock levels and purchasing costs.

While Welsh manufacturers’ margins were only slightly above the national average, the region performed well in other areas, including stock management.

The South-East, excluding London, ranked first with a score of 70.31, supported by the strongest profit margins in the UK. Scotland came second with 66.87, followed by the West Midlands on 63.70.

Northern Ireland and the North-West recorded some of the highest average revenues, at £657,164 and £635,487 respectively, but ranked lowest for profitability, retaining 25p and 28p in every pound.

Unleashed has tracked manufacturing performance since 2023, collecting data from more than 1,000 SMEs each quarter. Over the past three years, Welsh manufacturers have recorded profit margins ranging from 31% to 43%.

Joe Llewellyn, General Manager of ERP Small Business Division at The Access Group, said: “Regional disparities aren’t always obvious when you look at the UK’s manufacturing health as a whole – but they are an important barometer for both policymakers as well as manufacturers looking to start or expand a business.

“Our study challenges assumptions around certain regions, uncovering unexpected opportunities and highlighting issues that need to be addressed urgently if manufacturing is to play a part in shaping the local economy.

“Whatever region they operate in, SMEs have the advantage of speed and agility, especially if their decisions are driven by real-time stock, sales and financial data. They can adapt their production lines and supply chains, and even relocate to areas with better access to skills, suppliers and customers, and cheaper operating costs.”

Phil Mason, director of business consulting at international engineering consultancy NIRAS, said: “Site selection rarely comes down to a single factor. In the food and beverage sector, utilities – including electricity capacity, water availability and wastewater infrastructure – often have more influence on long term viability than the initial site cost.

“Labour, transport links and proximity to customers remain important, but manufacturers are also looking for locations with transferable labour skills to support future growth.

“The best-performing manufacturers aren’t necessarily spending more, they’re making better investment decisions. They’re asking whether they need more assets or whether they can unlock additional capacity, improve efficiency and remove constraints from the operations they already have.”