Electrical manufacturers warn uncertain project pipeline is holding back output

Weak demand has replaced materials, labour and supply-chain disruption as the main concern for electrical manufacturers responding to BEAMA’s latest Market Pulse survey. 

Some 51.7% identified demand as the factor most likely to restrict output in the coming quarter, compared with 17.2% citing component or material supply and 10.3% pointing to raw material prices. The 

The sector split is more revealing than the headline figure. Manufacturers serving electricity networks reported a confidence balance of +11.1 and a sales balance of +66.7. Building Electrical Systems and Heating & Ventilation, meanwhile, reported flat sales and confidence balances of -66.7 and -50 respectively. 

The weakness is consistent with a softer forward construction pipeline. Office for National Statistics data show that new construction orders in Great Britain fell by 10.5% in Q1, while new work declined by 1.9%. Output subsequently grew by 1.6% in the three months to May, so this is not a simple story of collapsing site activity. It is a warning about the work expected to follow.

That will be one of the big challenges facing the UK’s new Prime Minister Andy Burnham as he settles into Downing Street. While his predecessor Keir Starmer promised a building boom, the reality is that the construction industry is seeing some hotspots – such as in the data centre sector – but the wider industry is softening.

If that weakness continues to hold, it will likely lead to electrical manufacturers pulling back on investment in their factories. While twelve-month investment and recruitment intentions are still positive, both depend on projects moving from policy documents and budget allowances into credible volumes. 

The more positive result among network equipment manufacturers reflects the relative visibility of regulated grid expenditure. The next test will be RIIO-ED3, the price-control period covering the UK’s distribution networks from April 2028 to March 2033. Ofgem’s final methodology provides upfront funding for investment that must be delivered during RIIO-ED3, alongside adaptable mechanisms for demand that emerges later. 

Distribution network operators must submit their business plans in December 2026, with draft and final determinations following in 2027. BEAMA nevertheless argues that uncertainty over future volumes could preserve the stop-start ordering patterns that make supply-chain investment harder to justify.

Yselkla Farmer, CEO of BEAMA, noted, "Manufacturers continue to invest because they believe in the long-term future of electrification, but the scale of investment depends on demand. For the first time in years, we're seeing the heat pump market stall, an early warning sign that weak consumer uptake of electrification is starting to weigh on investment confidence across both heat technologies and electricity networks.

"Government has taken an important step by publishing its draft Strategic Policy Guidance for electricity networks, recognising the need for regulation that better supports growth, investment and the supply chain. That progress must now be matched by a clear and consistent approach to electrification policy. Recent decisions on Ofgem's ED3 methodology underline how important it is that the regulatory framework gives businesses and network operators the confidence to invest ahead of need. 

"We now need urgent action to remove the barriers to electrification, including addressing the cost imbalance between electricity and fossil fuels. Greater consumer uptake will give manufacturers and network operators the confidence to invest, helping us accelerate electrification, strengthen energy security and deliver net zero."