UK SME Manufacturing at a Glance: Q1 2026
Based on Q1 2026 data from SME manufacturers across the UK using Unleashed software.
£484,626
Average sales revenue per business
33%
National average gross profit margin
26 days
National average supplier lead time
On average, UK SME manufacturers retained just 33p for every £1 of revenue generated in Q1 2026 – but regional performance varied significantly, with some areas retaining as little as 25p and others as much as 38p per pound.
UK Regional Manufacturing Performance Rankings 2026
Every UK region was scored across five operational metrics – revenue, profit margin, lead times, stock on hand, and purchasing costs – and combined into an index score out of 100.
Regional Highlights: What the Data Tells Us
South East (70.31): Leads on Profitability
The South East is home to a diverse manufacturing base spanning maritime engineering, food and drink, and advanced technology. Despite generating revenue close to the national average (£488,030), it achieved the highest profit margin in the UK at 38% – or 38p for every pound earned. Firms here also maintained lean stock on hand levels (£143,122), pointing to tighter inventory control as a key driver of margin health.
Scotland (66.87): Efficiency puts Scotland in Second Place
Scotland placed second by maintaining tight control over lead times (22.49 days – the third fastest nationally) and stock on hand, while generating a healthy profit margin of just under 35%. Its performance shows that revenue volume isn't the only path to strong results.
West Midlands (63.70): Healthy Profits, Short Lead Times
Home to traditional heavy industries such as foundry work, metal stamping, automotive components, and specialist tooling engineering, the West Midlands scored highly on profitability, with firms retaining 36p per pound, the third highest nationally, even though revenue was among the lowest. Despite holding above-average stock levels (£201,829), their supplier lead times of under 20 days are the fastest of any region - helping maintain a fast operational flow.
North West & Northern Ireland: High Revenue, Tight Margins
The research shows that high revenue isn’t always translating into healthy margins. Northern Ireland generated the highest average revenue of any UK region (£657,164) but retained just 25p per pound - the lowest margin nationally. The North West generated the third-highest revenue (£635,487) but held onto just 28p per pound. The figures suggest that without tight operational control, revenue growth masks profitability problems.
North East: Results Dampened by Margin Volatility
The North East has swung between 30% and 44% profit margin over the last three years - the widest range of any UK region. While its Q1 2026 margin of 34% sits near the national average, this volatility signals operational inconsistency that manufacturers and investors should monitor.
Full regional data table
| Region | Average lead days | Sales revenue (£) | Profit margin (per £) | Stock on hand value (£) | Purchasing costs (£) | Index score (out of 100) |
| South East | 24.41 | 488,030.40 | 38% | 143,122.19 | 490,852.19 | 70.31 |
| Scotland | 22.49 | 395,228.69 | 35% | 119,553.49 | 465,438.00 | 66.87 |
| West Midlands | 19.52 | 410,997.59 | 36% | 201,828.90 | 430,141.58 | 63.70 |
| East Midlands | 26.98 | 486,401.20 | 35% | 129,902.97 | 519,043.64 | 62.69 |
| Wales | 29.73 | 272,805.25 | 34% | 105,828.29 | 350,508.62 | 59.89 |
| South West | 26.28 | 287,648.16 | 32% | 112,219.66 | 375,731.81 | 58.26 |
| Yorkshire and the Humber |
23.11 |
654,987.32 | 31% | 163,280.36 | 647,005.94 | 58.19 |
| London | 32.81 | 465,116.93 | 35% | 124,957.29 | 545,008.47 | 55.20 |
| East of England | 26.66 | 454,955.45 | 37% | 192,015.49 | 576,144.11 | 54.06 |
| North West | 24.75 | 635,486.97 | 28% | 186,293.07 | 594,933.43 | 50.32 |
| North East | 36.10 | 606,687.56 | 34% | 168,530.75 | 726,928.93 | 43.38 |
| Northern Ireland | 15.93 | 657,163.80 | 25% | 254,425.34 | 690,197.36 | 41.95 |
| National average | 25.73 | 484,625.78 | 33% | 158,496.48 | 534,327.84 | 57.07 |
Emerging UK Manufacturing Cities: The Growth Hotspots for 2026
Beyond regional performance, Unleashed assessed the future potential of the top five manufacturing cities across each region of England.
Towns and cities were ranked using an index from four publicly available sources and a weighted formula.
Data points included the number of manufacturing units already in operation (indicating the strength of the existing manufacturing community), and broadband speeds (to support advanced manufacturing), as well as available warehouse space and workforce size (see full methodology for more details).
Stoke-on-Trent
64.2
Fast broadband (164 Mbps), plentiful industrial space, and proximity to major manufacturers like JCB and Michelin make Stoke the UK's top emerging manufacturing city. Its connectivity is laying the foundations for AI-enabled advanced manufacturing.
Leeds
63.9
An established manufacturing community of 1,560 units and a workforce of 27,000 drive Leeds into second place. Strong infrastructure and connectivity underpin its growth credentials.
Birmingham
60.9
With 2,105 manufacturing units and a workforce of 28,000 Birmingham has the largest manufacturing base of any emerging city - making it a natural hub for scale.
Top Emerging Manufacturing Towns and Cities
The following table ranks the top 10 UK towns and cities showing the most potential for manufacturing growth, based on infrastructure, workforce size, and local connectivity.
| City | Number of manufacturing units | Average download speed (Mbps) | Workforce size | Warehouse space per 10,000 residents (m2) | Index score out of 100 |
| Stoke-on-Trent | 610 | 164 | 13,000 | 11.164 | 64.24 |
| Leeds | 1,560 | 107 | 27,000 | 6.879 | 63.90 |
| Birmingham | 2,105 | 75 | 28,000 | 5.949 | 60.89 |
| Hull | 660 | 127 | 21,000 | 10.395 | 60.55 |
| Wakefield | 805 | 110 | 19,000 | 12.230 | 60.25 |
| Bradford | 1,270 | 98 | 23,000 | 7.729 | 56.00 |
| Northampton | 435 | 120 | 18,000 | 10.939 | 54.24 |
| Sheffield | 1,230 | 103 | 19,000 | 6.520 | 50.20 |
| Swindon | 335 | 157 | 6,000 | 9.262 | 47.71 |
| Leicester | 1,060 | 98 | 19,000 | 6.192 | 45.89 |
The research also uncovered which areas are trailing behind.
Newcastle-upon-Tyne ranked lowest with an index score of 14.16 out of 100, partly due to a lack of warehousing space and slow broadband speeds. Norwich was just one place up (14.23), with the slowest broadband speeds of all the areas analysed. Middlesbrough was third from bottom, with low scores across all data points (15.13).
Is Your Manufacturing Business Keeping Up?
Unleashed gives UK SME manufacturers real-time visibility of stock, margins, lead times, and purchasing costs - so you can make faster, smarter decisions whenever you operate.
What Manufacturing Experts Say
To understand what the data means for SME manufacturers and founders, we spoke to three industry experts.
Joe Llewellyn, General Manager of ERP Small Business Division, The Access Group
"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.
It’s perhaps surprising that the South-East came top for profitability, given that costs tend to be higher. But it’s a sign that firms in the region have a tight handle on their operations, successfully converting the revenue they generate into profits. Similarly, Stoke, which has seen its traditional industries disappear, is currently showing the most potential for growth.
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."
Gareth Johnston, Operations Director, BGB
"We’re seeing major growth opportunities in advanced manufacturing and engineering.
This includes long-term demand for high-performance slip rings and rotary unions, particularly for aerospace technologies like drones and radar.
While the Midlands remains a precision engineering hub, global export complexities are a challenge, since international trade drives over 90% of our turnover.
Recruitment is tough, particularly finding specific technical expertise, and rising material costs and changing EU and global regulations also require vigilance.
In response, we invest heavily in apprenticeships and partnerships like the West Grantham Academy to train the next generation. We have also expanded our testing facilities with climatic chambers to simulate extreme environments, allowing us to improve component reliability for global partners."
Phil Mason, Director of Business Consulting, NIRAS
Meanwhile, Phil Mason, director of business consulting at NIRAS, an international engineering consultancy, explained what could draw manufacturers to a region in 2026:
"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."
Frequently Asked Questions: UK Manufacturing Growth 2026
Which UK region has the best manufacturing performance in 2026?
The South East leads the UK Manufacturing Growth Index 2026 with an index score of 70.31 out of 100. It achieved the highest profit margin in the country at 38%, and firms held lower-than-average stock on hand – a sign of tight operational control. Its manufacturing base spans maritime engineering, food and drink, and advanced technology.
What is the average profit margin for UK SME manufacturers?
The national average gross profit margin for UK SME manufacturers in Q1 2026 was 33%, meaning businesses retained just 33p for every £1 of revenue generated. Margins ranged from 25% (Northern Ireland) to 38% (South East), highlighting significant regional variation.
Which UK cities have the most manufacturing growth potential?
Stoke-on-Trent (index score 64.24) ranks first as the UK's top emerging manufacturing city, followed by Leeds (63.90) and Birmingham (60.89). Rankings are based on a weighted formula using workforce size, number of manufacturing units, and available industrial space. Local broadband speeds were also assessed to see which towns/cities can support the technologies used in advanced manufacturing such as artificial intelligence (AI).
Why do high-revenue regions like Northern Ireland have lower profit margins?
Northern Ireland generated the highest average revenue of any UK region (£657,164) but retained just 25p per pound – the lowest margin nationally. The North West faced a similar challenge, generating £635,487 in average revenue but retaining only 28p per pound. This underlines why revenue alone is a poor indicator of manufacturing health.
How can inventory management software help UK manufacturers improve margins?
Inventory management software like Unleashed provides real-time visibility of stock levels, purchasing costs, lead times, and sales performance. This helps manufacturers reduce waste, avoid overstocking, shorten supplier lead times, and protect cash flow. The South East – the UK's most profitable manufacturing region – holds lower-than-average stock on hand, suggesting that tighter inventory control is a meaningful driver of margin health.
What data does the Unleashed UK Manufacturing Growth Index use?
The index is based on Q1 2026 operational data from SME manufacturers using Unleashed software, evaluated across five metrics: average sales revenue, supplier lead days, gross profit margin, stock on hand value, and purchasing costs. This is benchmarked against 12 consecutive quarters of historical data (Q2 2023–Q1 2026) to assess volatility and trend. Emerging city rankings use third-party data on workforce size, manufacturing unit counts, available industrial/warehouse space, and local broadband speeds.
Each quarter’s figures are based on a cohort of more than 1,000 SMEs.
Is Unleashed software suitable for small manufacturers?
Yes. Unleashed is built specifically for small to medium-sized manufacturers and product businesses. It manages purchasing, production, warehousing, and sales in a single cloud-based platform – giving teams complete operational visibility without the complexity or cost of enterprise ERP systems. Try it free today.
What factors determine where manufacturers should locate or expand?
According to manufacturing consultants, the key factors have shifted beyond traditional considerations like labour costs and transport links. Utilities infrastructure (electricity capacity, water, wastewater), broadband speed, warehouse availability, and access to transferable skills from adjacent industries are now critical. Future readiness – whether a site can support decarbonisation plans and production growth – is increasingly a deciding factor.
Methodology
The Unleashed Regional Growth Powerhouse Report assessed the current performance and future growth opportunities for UK SME manufacturers. The findings are based on Q1 2026 data from 1,322 manufacturing businesses using Unleashed software. Performance was evaluated against average sales revenue, lead days, profit margins, stock on hand, and purchasing costs.
To understand which towns and cities have the most growth potential, Unleashed’s researchers analysed publicly available data from the Local Government Association; Non-domestic rating: business floorspace report; Ofcom-accredited Broadband.co.uk; Nomisweb/ONS.
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