The tumult that defined 2024 has left so many of us wondering (fearing?) just what’s all in store for this new year. The manufacturing industry is no exception, especially with so many considerable challenges on the horizon: impending tariffs, labor shortages, technological upheaval, and more.
BDO USA, one of the nation's leading professional services firms, recently weighed in with its own predictions. As a proud member of the BDO Alliance Network – an association of accounting and consulting firms with similar client service goals – MarksNelson wanted to share some of the insights from BDO’s recent post, “2025 Predictions: Manufacturing Industry Trends to Know,” and offer our own take on the forecast.
Get Ready for ‘Growth Mode’
While so many industries have been in what the post calls “triage mode” for so long (especially since the COVID-19-related supply chain disruption), BDO predicts many manufacturers will finally pivot to “growth mode” in 2025, focusing on strategy and looking at potential growth opportunities, as author Bill Pellino wrote:
“Manufacturers will look to return to classic strategic planning processes, doubling down on attractive markets, driving a disciplined approach to execution, and formalizing feedback loops to understand when strategic shifts are necessary.”
Of course, any expansion or big strategic chess move hinges on having the human resources you need for such growth. Manufacturers have struggled for a while to both replace an aging workforce while also filling skill gaps in their talent pipeline. Pellino predicts more companies will work to attract more women using a multipronged approach.
He also predicts manufacturers will highly value candidates with STEM skills in the coming year. Of course, that may be challenging: BDO reports the STEM workforce only grew by 20% between 2011 and 2021, while the need in manufacturing has been outpacing supply for a while.
Brandi DiGiorgio, a partner in Assurance & Business Advisory Services and Manufacturing and Distribution leader at MarksNelson, weighed in on what she’s seeing:
“Many of our manufacturing clients have been looking to fill their own labor gaps by partnering with educational institutions and/or offering internal training and education programs,” she said. “Unfortunately, filling the talent pipeline has been a struggle for many years, but I think manufacturers can be cautiously optimistic about 2025.”
Time to Fully Embrace Tech
Technology will continue to play a major role in the sector in 2025, BDO predicts, especially in the realm of artificial intelligence. While many manufacturers have adopted some level of AI already, Pellino predicts 2025 will bring more a sophisticated use of the technology, especially as so many have learned important lessons from colleagues and competitors.
He writes that AI will be used to accelerate prototyping, machine-learning processes and even models, as well as analyze market trends, understand customers for demand forecasting, and move concepts into reality much more quickly.
DiGiorgio agrees and said AI can bring about a ripple effect of benefits for manufacturers:
“AI and data need to be strongly considered by manufacturing clients,” she said. “The insights learned from these advances can not only improve processes but also help offset some of the labor costs and other cost concerns.”
AI adoption, however, first requires a strong data infrastructure, and BDO predicts 2025 will be the year when many manufacturers finally understand how critical this upgrade is. Unfortunately, too many still face the challenge of working with countless disparate systems and weak data foundations.
Tim Anderson, a partner in State and Local Tax and Manufacturing and Distribution leader at MarksNelson, emphasized the importance of this prediction:
“To fully leverage the latest technology, companies must organize and invest in data infrastructure to make faster-informed decisions that can advance their growth, mitigate risk and outpace competition,” he said. “Strategic growth simply will not happen without this kind of investment.”
BDO also predicts that the investment in data infrastructure will be even more appealing as more manufacturers realize it can help them better analyze data from the plant floor, optimize production practices, improve employee retention and ultimately cut costs.
Anderson said he’s already witnessed many manufacturing clients begin to adopt new equipment technologies to replace specific roles, especially warehousing. And he predicts many companies will take advantage of the smart manufacturing equipment options and central monitoring tools in the coming year.
“As older equipment is disposed, new equipment will be equipped with the latest technology that will help keep pace with the competition,” he said. “These facilities will optimize automation, machine learning, servicing and equipment operation. This technology will enable manufacturers to be more efficient and expand growth opportunities, as well as meet the increased demand for products with the same or decreased labor force.”
The Future is What You Make of It
Among the systemic supply chain issues and massive changes to trade policy, BDO acknowledges the challenges facing manufacturers are complex, requiring plenty of patience and persistence. Yet, Pellino writes that 2025 could prove to be a key turning point in what’s been an already eventful decade so far.
“Manufacturing executives should embrace transformative strategies that will shape the industry's future. From fortifying their data infrastructure and leveraging AI to streamline operations, to preparing for trade policy shifts, 2025 presents opportunities to redefine business growth. By addressing these trends now, manufacturers can better position themselves for success in 2025 and beyond.”
Need a partner to help you navigate these predictions and the various challenges facing your manufacturing operation? Our team is ready to help!
