1/13/2025
BY: JOSH JOHNSTON
The manufacturing industry has always been synonymous with innovation and change. But as we move further into 2025, the challenges and opportunities facing manufacturers, especially small to midsized firms, are larger and more complex than ever before. In an era of rapid technological advancements, evolving workforce needs, and unpredictable global shifts, Michigan’s manufacturers must look ahead to stay competitive. Let’s dive into three of the top trends shaping the manufacturing landscape in 2025:
- Artificial Intelligence, Machine Learning, and Data Analytics: The Future is Now
Artificial Intelligence (AI) and Machine Learning (ML) have already begun transforming how manufacturers operate, but in 2025, their role will become even more integral. A global survey by Boston Consulting Group (BCG) reveals that while 89% of manufacturing executives plan to implement AI technology in their production processes, only 16% of AI adopters have successfully achieved their goals1. This highlights both the excitement surrounding the potential of AI as well as the gap between expectation and execution.
While not all implementations have proven fruitful, one area where AI is making a significant impact is Predictive Maintenance, in which machines can provide data that helps identify maintenance needs before a failure occurs. Internet of Things (IoT) sensing devices capture data such as heat, vibration, and electrical current, and feed it into advanced algorithms that predict when machines will begin operating outside of normal, safe conditions. This practice has resulted in an impressive 40% reduction in maintenance costs and a 70% decrease in unplanned downtime for early adopters2. Predictive maintenance ensures that equipment is always running at peak efficiency, avoiding the trap of reactive maintenance.
Another exciting development within Industry 4.0 is the rise of Digital Twins. A Digital Twin is a virtual model of a physical object or process. Manufacturers can create these digital counterparts to simulate and analyze the performance of machinery, production lines, and entire factories in a virtual space. This enables companies to test ideas in a virtual space before making expensive and risky real-world investments—a valuable resource for manufacturers aiming to reduce costs and realize efficiencies.
One Digital Twin success story comes from Bayer Crop Science. Bayer utilizes digital twins to develop "virtual factories" for their nine corn seed production facilities across North America. After seeds are harvested from Bayer’s fields, they undergo processing and packaging at these sites before being distributed to farmers. The company has crafted detailed digital models for each location, encompassing the equipment, processes, product flow, material inventories, and operational guidelines. These digital representations allow Bayer to conduct "what-if" scenarios to analyze and optimize each facility's performance without necessarily going in and physically disrupting existing operations3.
- Talent Attraction and Retention: A Growing Challenge
As manufacturing technologies continue to accelerate, so does the need for highly skilled workers. Yet, attracting and retaining talent remains one of the industry's biggest challenges today. According to Deloitte’s 2025 Outlook on Manufacturing, “…nearly 75% of manufacturing executives view attracting and retaining talent as their top challenge”.4
The issue is multifaceted. First, there is the aging workforce. Experienced workers, particularly those with decades of expertise, are retiring at a rapid pace. This “Silver Wave” is leaving a talent and knowledge gap that is difficult to fill. Second, the fast pace of technological change creates a growing demand for workers with new, specialized skills. For example, as AI and automation become more widespread, workers will need advanced training in robotics, machine learning, and data analysis.
Adding to these challenges is the perception among younger generations that manufacturing jobs are undesirable or less innovative than careers in technology or other sectors. To address this, manufacturers must prioritize reshaping their image by emphasizing the exciting and evolving nature of modern manufacturing careers. Offering training programs, flexible work options, and a clear path for career advancement can help make the industry more attractive to younger talent.
- Reshoring: Bringing Manufacturing Back Home
According to the Bureau of Labor Statistics, the COVID-19 pandemic triggered a dramatic 43% drop in manufacturing output in the U.S. at one point—the largest decline experienced in the United States since World War II5. This highlighted the vulnerabilities in offshoring manufacturing operations and global supply chains, particularly the over-reliance on overseas suppliers and manufacturers. In response to these disruptions, many companies are looking to bring production back to domestic shores—a trend known as reshoring.
However, reshoring is not without its challenges. The main hurdle is the higher labor and operational costs associated with manufacturing in America compared to offshore options. Additionally, with tariff policies constantly shifting, manufacturers must carefully assess the economic viability of reshoring decisions.
Despite these challenges, reshoring offers significant opportunities. It allows companies to shorten supply chains, lower costs associated with transportation and logistics, and better align production with market demand. As the reshoring trend continues, manufacturers can expect to see more government incentives and initiatives aimed at supporting domestic production.
In 2024, the Biden administration announced that it would provide $325MM in funding through the CHIPS and Science Act for a new semiconductor factory in Saginaw County6. The intention is to help protect American firms that rely on these products by alleviating pain caused by the ongoing foreign semiconductor shortage driven by shifting trade regulations, production disruptions, and increased demand.
In 2025, the manufacturing industry is poised for exciting transformations. From advancements in AI and machine learning to the continued rise of reshoring and automation, the opportunities for growth and innovation are vast. However, manufacturers must navigate these changes carefully, ensuring they have the right talent, technology, and strategies to adopt a forward-thinking mindset that will position them for success today and in the future. MMTC is here to help. Contact us today!
MEET OUR EXPERT: Josh Johnston, Lean Program Manager
Joining The Center in 2024, Josh leverages continuous improvement tools and leadership philosophies to help Michigan manufacturers achieve their goals and objectives. His areas of expertise lie in Lean implementation, smart technologies, project management, value stream mapping, and kaizen facilitation. With a solid foundation in continuous improvement and a commitment to driving operational excellence, Josh is dedicated to fostering innovation and efficiency in Michigan's manufacturing sector.
Since 1991, the Michigan Manufacturing Technology Center has assisted Michigan’s small and medium-sized businesses to successfully compete and grow. Through personalized services designed to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Learn more at www.The-Center.org.
Citations
1: World Economic Forum, and Boston Consulting Group. Harnessing the AI Revolution in Industrial Operations: A Guidebook. World Economic Forum, October 2023, www.weforum.org/agenda/2023/10/harnessing-ai-revolution-industrial-operations/.
2: Viking Analytics. "Preventive vs. Predictive Maintenance: Which Is More Effective?" LinkedIn, 8 Mar. 2023, www.linkedin.com/pulse/preventive-vs-predictive-maintenance-which-more-effective/.
3: Olavsrud, Thor. "Digital Twins: 4 Success Stories." CIO, 30 Aug. 2022, www.cio.com/article/189121/digital-twins-4-success-stories.html.
4: Coykendall, John, et al. "2025 Manufacturing Industry Outlook." Deloitte Insights, 20 Nov. 2024, www2.deloitte.com/us/en/insights/industry/manufacturing/manufacturing-industry-outlook.html.
5: Bureau of Labor Statistics, U.S. Department of Labor. “U.S. manufacturing output, hours worked, and productivity recover from COVID-19.” The Economics Daily, https://www.bls.gov/opub/ted/2022/u-s-manufacturing-output-hours-worked-and-productivity-recover-from-covid-19.htm
6: Boak, Josh. "US to Provide $325 Million for New Michigan Semiconductor Factory." AP News, 9 Dec. 2023, apnews.com/article/hemlock-michigan-saginaw-chips-trump-biden-harris-3294f2da8e1faf71e6bb6b3ef682e092.
Categories: Advanced Manufacturing,
Data & Trends,
Industry 4.0,
Innovation,
Reshoring,
Smart Manufacturing,
Technology,
Workforce