Manufacturing Industry Trends to Watch in 2025

Technology integration, talent recruitment and retainment, and looming tariffs are some of the manufacturing industry trends to watch in 2025.

“The manufacturing industry is set to stay in the national spotlight in 2025,” reported Manufacturing Dive earlier this month. “[President-elect Donald] Trump plans to use aggressive tariffs to entice companies to build factories in the U.S. Whether that plan can work, however, hinges on how well the country can recruit and retain manufacturing talent, a challenge that has plagued the industry for years.”

Artificial intelligence (AI), especially generative AI, looks to play a role in improving operational efficiency and help in long-term talent strategy.

Deloitte predicts that manufacturers will “prioritize targeted investments in their digital and data foundation to boost innovation and tackle ongoing skills gaps and supply chain challenges.”

Biggest Story in Manufacturing This Year Could be Tariffs

All eyes in the manufacturing industry are on President-elect Trump and the possibility that he could impose new tariffs on day one of the second term of his administration.

“Donald Trump came to Washington eight years ago vowing to rewrite U.S. trade relationships, shrink a massive goods trade deficit and rebuild America's industrial base with new tariffs,” reported Reuters on the eve of the inauguration. “The president-elect is about to embark on an even more aggressive effort in his second term, pledging to impose 10 percent duties on all U.S. imports and 60 percent on goods from China.”

President-elect Trump’s upcoming domestic policy agenda is centered around growing U.S. jobs, particularly in manufacturing, says Manufacturing Dive. Some numbers to keep an eye on:

• 46.4 percent: The percent of China-based imports in 2022 made up of machinery and mechanical appliances.
• 30.2 percent: The percent of total U.S. trade made up by Canada and Mexico in November 2024.
• $131 Billion: The total value of goods imported from China to the U.S. in November 2024.

“The reality of the supply chain is that U.S. companies rely heavily on components and raw materials coming outside the U.S.,” Cortney Morgan, a partner in Husch Blackwell’s international trade and supply chain practice, told Manufacturing Dive.

Manufacturers are responding by:

• Diversifying their suppliers, especially relying less on China.
• Reviewing their supplier contracts to share or avoid the cost of duties.
• Structuring long-term supply agreements to address possible tariff increases.

Deloitte says that changes to trade policy and tariffs could drive up raw material and component costs and could have ripple effects throughout the supply chain.

Expect some of the tariff speculation to become a bit clearer in the first month of Trump’s second term as administration priorities become apparent.

American Companies Look Towards Onshoring

One of the consequences of rising tariffs could be American companies looking towards onshoring or relocating their manufacturing operations and supply chain lines back in the U.S.

It’s a trend that has already been taking place according to Manufacturing Dive with Tom Kurfess, chief manufacturing officer at the Georgia Institute of Technology and executive director of the George Tech Manufacturing Institute, telling the publication that “supply chain fragility and national security as two issues influencing companies to onshore manufacturing, including for high-tech products like semiconductors.”

The reality is it will take time for new projects stateside to take hold.

“In the meantime, companies need to focus on diversifying sourcing and boosting productivity and efficiency,” Steve Shepley, vice chair and U.S. industrial products and construction sector leader at Deloitte, told Manufacturing Dive. “When they look at the type of supply that needs to be sourced from the U.S., of course, that will have a higher cost profile than the other locations that you have been using historically. So, this is going to put a whole other level of focus on the productivity of what you source.”

Clean Technology Manufacturing Powers Forward

Manufacturers who have invested in clean technology will watch for any changes to the Inflation Reduction Act that could affect investment going forward in that area.

“The mood is much darker in the clean energy industry, especially among wind power executives,” reported CNN. “Trump has promised to yank federal support for clean energy and repeal the Inflation Reduction Act, Biden’s signature climate bill.”

Wind, solar and battery storage installations increased at an annual rate of 14 percent during Trump’s first term, according to the American Clean Power Association.

“Politicians campaign in rhetoric, but when they make decisions about policy it tends to be more nuanced,” Frank Macchiarola, chief policy officer at the American Clean Power Association, which represents wind, solar, clean hydrogen and other clean energy companies, told CNN.

Deloitte expects investment in the development and production of clean technology products is likely to continue in 2025, with manufacturers prioritizing targeted high-ROI products that will help customers meet their company-set emissions goals.

Addressing the Talent Applicant and Skills Gaps

The manufacturing industry is expected in 2025 to find creative ways to address the talent applicant and skills gaps.

Deloitte pointed out that nearly 60 percent of manufacturers in the National Association of Manufacturers (NAM) outlook survey for the third quarter of 2024 cited the inability to attract and retain employees as their top challenge. And that number was only slightly down to 55 percent in the fourth quarter of 2024.

“Despite loosening labor markets, manufacturers should continue to focus on a long-term talent strategy, including leveraging technology, to address the ongoing applicant gap and skills gap and improve retention,” advised Deloitte.

Manufacturers are being encouraged to work with trade schools and community colleges to train workers for skills in the industry, and some manufacturers are exploring flexible work structures such as job sharing and four-day workweeks.

“To help meet workers’ changing expectations, reduce turnover, and plan for demand volatility, companies seem to be increasingly focusing on improving the worker experience, taking an ecosystem approach to talent development, and leveraging digital tools that offer advanced talent planning and workforce management capabilities,” says Deloitte.

Recent studies, says Deloitte, indicate that by 2030, AI-based management of employee skills and how people are deployed to meet business needs will be a core capability.

Manufacturers are Going All In on AI

Like most of the world, expect manufacturers to go “all in” on AI in 2025.

“Manufacturers are increasingly integrating AI on the factory floor to boost production speeds, cut costs and fill labor gaps,” reported Manufacturing Dive.

Primary case use for AI in manufacturing includes:

• Improving customer interactions.
• Expediting the design production process.
• Performing predictive maintenance on equipment.
• Aggregating and analyzing operational data.

Deloitte sees technology playing a role in the supply chain with manufacturers able to leverage technology solutions such as AI and supply chain planning tools to improve efficiency while maintaining resilience.

“Manufacturers are likely to continue to invest in their digital foundation for smart operations and target high-ROI use cases for advanced technologies to address elevated costs, the ongoing skills gap, and the need for efficiency gains across the organization,” says Deloitte.

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