For many manufacturing owners, the challenge isn’t simply making more products, it’s what to invest in, where to find the money, how to turn engineering know-how into commercial value – ultimately how to build a business that thrives beyond its current ownership.
National Manufacturing Day is often about showing people what happens inside the factory. But perhaps it is also an opportunity to think about what happens around the factory – the investment decisions, innovation, people, ownership and financial choices that determine whether that factory will still be thriving in ten years’ time.
Coventry & Warwickshire’s manufacturing economy is changing rapidly with advanced manufacturing and engineering spanning automotive, aerospace, rail, low-carbon technologies, defence and connected and autonomous vehicles.
The change is visible on the ground. Aurrigo International has recently moved into a 130,615 sq ft Coventry facility designed to support advanced engineering, autonomous vehicle development and high-volume manufacturing.
At the same time, the Coventry & Warwick Investment Zone is targeting battery manufacturing, future mobility and advanced manufacturing supply chains, with significant tax incentives available to qualifying businesses subject to eligibility. Coventry & Warwickshire isn’t simply preserving manufacturing, it’s becoming a testbed for the next generation of manufacturing.
For an owner-managed manufacturer across the region, turning over £2m, £5m or £10m, we have chosen three areas we believe are future facing. At Dafferns, we look to help manufacturing owners make better business decisions built on a foundation of tax expertise.
Where will the next £250,000 create the most value – capacity, productivity or capability?
Manufacturers are constantly making investment decisions. For owner-managed businesses a significant capital investment can affect cashflow, profitability, tax and ultimately the value of the business. There may be a temptation to ask first “What tax relief can I get?”, better to ask “Where can our next investment create the greatest improvement in productivity or capability?”.
Tax incentives can certainly influence the decision. For example, the C&W Investment Zone currently offers enhanced capital allowances, including accelerated structures and buildings allowances for qualifying buildings in the investment zone tax sites. It follows that where robust forecasting, cash-flow modelling, capital investment planning and tax advice come together, good commercial decisions follow.
Corporate Tax Partner, Mark Brayshaw, comments “we see the accountant’s role as helping businesses connect the numbers with the strategy. There is lots of support available. We’ve seen this locally through the Warwickshire Manufacturing Growth Programme. Henley Engineers, precision CNC machinists, took its first steps towards automation and invested in their first robotic arm – it’s important as professionals we shout about these programmes.”
For manufacturers, initiatives like this demonstrate why the conversation shouldn’t begin with what tax relief is available, it should begin with what capability does their business need next.
Turn innovation into commercial value
Futurist Henrik von Scheel has said “Innovation never comes from technology, it always comes from engineering in manufacturing”. Ask many manufacturing company owners whether they undertake R&D and the answer might be “not really”, ask whether they’ve redesigned a component, automated a process, reduced waste or solved a customer’s engineering problem and the answer may be very different.
Manufacturers understand their engineering problems, accountants need to understand the engineering behind the solution. Innovation can have a financial value as well. The questions that need to be asked are ‘Are we properly recognising the innovation already happening inside our business?’; and ‘Are we reinvesting the benefit into future growth?’.
Dafferns very own R&D specialist, Scott Whitmore, has helped local businesses secure over £2 million in R&D tax credits in the past 12 months. This requires an accountant to truly understand the business. Dafferns are working across many sectors, including automotive, chemical engineering, software development and beyond. Scott has that special combination of technical understanding and tax expertise needed to formulate robust R&D claims.
Can the Business succeed without you?
According to Make UK’s ‘Who inherits UK manufacturing’ report, family-owned manufacturers are at the cornerstone of the UK’s industrial economy, accounting for 65% of manufacturers, 9 out of 10 of which are managed by a family member.
Many successful family manufacturing businesses have grown because of determination, niche technical skills and a charismatic founder – but what happens next? Succession planning is no longer simply about deciding who gets the shares, it is about creating a business that someone else would genuinely want to own.
Brian Jukes, Joint Managing Partner, suggests a more important question “What is the business worth today, and what could increase its value over the next three to five years? This is not simply a tax question, it combines financial, personal and commercial decisions. It could potentially mean moving from a family business to a scalable business whereby growth creates shareholder value, broadens the management team and bakes in a succession pathway”.
Custodians of Britain’s industrial know-how
Underpinning investment, innovation and succession, beneath all three sits something that is harder to measure – knowledge.
I spotted this from the Make UK Report launch: Chris Arrowsmith, Managing Director at West Midlands firm Midland Deburr & Finish says “Family ownership plays a vital role in retaining skills and encourages businesses to think in decades rather than quarters”.
Fellow director, Sue Arrowsmith, rightly points out “there is an enormous amount of knowledge inside family manufacturing businesses that rarely appears on a balance sheet”.
The engineering know-how built up over decades, relationships with suppliers and customers, reputation for quality and the practical knowledge of people who know how to solve problems. The balance sheet tells you what you’ve built, it doesn’t necessarily tell you what your business knows. Dafferns can help manufacturing owners connect tax, finance and commercial strategy.
Manufacturing’s next chapter
Coventry & Warwickshire doesn’t have to choose between its manufacturing heritage and its manufacturing future. The region’s strength lies in the connection between the two: decades of engineering expertise combined with advanced technology, automation, electrification and entrepreneurial ownership.
For today’s manufacturing owner, the question is therefore not simply ‘How do we grow’, more ‘What do we need to build today to make the business more valuable, more resilient and less dependent on its current owners tomorrow?’
That might mean investing in automation. It might mean recognising and reinvesting in the innovation already happening inside the business. It might mean developing the management team, strengthening financial resilience or starting a succession conversation several years earlier than expected.
The factory may be where the products are made. But the future value of the business is built through the decisions made around it. That’s where we believe an independent accountancy firm can add real value — connecting the numbers, tax and commercial strategy to help manufacturing businesses move confidently into their next chapter.
Business valuations 
Cross border taxes 
Payroll 
Cloud accounting, bookkeeping and VAT 
