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Manufacturing Keys to Success in 2025: From global supply chain disruptions and labor shortages to the explosion of AI and the worst public health crisis in a century, the challenges of the last five years have tested the industry’s resilience and ingenuity like never before and there are no sign things are slowing down. Nonetheless, there are reasons to be optimistic. Amidst the challenges, diversified, interconnected supplier networks have emerged to boost agility and resiliency, and innovative operating models are helping firms meet the shifting expectations of customers and staff.
While every manufacturing firm will have its priorities for 2025, there are four areas where all leaders should place particular focus.
1. Lean in on Technology – As technologies like AI, automation, and the Internet of Things continue to advance, they are opening up opportunities for manufacturers to optimize, innovate, and grow. To be successful, firms should intensify their efforts to align their technology strategy with their business goals, using tools like digital twins, predictive analytics, and causal AI to better anticipate and mitigate risk, improve processes, and enhance customer and staff experiences.
2. Connect the Sustainability Dots – Demonstrating clear progress on decarbonization, responsible resource use, and energy efficiency are now business imperatives, helping manufacturers comply with regulations, reduce costs, and attract sustainability-conscious customers and talent. Although manufacturing models designed to address these objectives are starting to reduce the industry’s environmental footprint, to achieve full impact sustainable practices must be integrated across one’s entire network of suppliers, partners, and customers.
3. Invest in a Talent Culture – Technology is only effective if it is known how to maximize its potential. In addition to training workers on deploying new digital tools, manufacturers should invest in a culture that encourages people to experiment and innovate with them regardless of their job role or level. Equally important is the need for leaders to adapt quickly to changing market conditions.
4. Prioritize Customer-centricity – Customers have heightened expectations around delivery scheduling, seamless interaction, personalization, and after-sales support. To meet these expectations, firms must place customers at the center of their business models, including investment in research and development. By exploring different ways of measuring success and aligning new products and services with what customers say they want, manufacturers can strike a balance between addressing immediate demands and preparing for future market shifts.
While each of the above priorities carries its importance, together they build towards a single overall goal: resiliency. After five years defined by challenges, some worse than expected and others that weren’t predicted at all, the ability to navigate and respond quickly to disruption has become the industry’s most important driver of success, both in 2025 and beyond.
Cleveland-Cliffs Eyeing All-cash Bid for U.S. Steel: In the wake of actions taken by President Biden on January 3 to block Nippon Steel’s bid to buy U.S. Steel, Cleveland-Cliffs has renewed its offer to become the new owner of the once-mighty steel giant. In prior discussions, U.S. Steel rejected the Cleveland-Cliffs bid but accepted Nippon’s $14.9 billion offer, an offer President Biden blocked on the grounds of national security. President-elect Donald Trump has also been a vocal opponent of the transaction.
Cleveland-Cliffs is aiming to purchase all of U.S. Steel with an offer in the high $30s per share and then sell its Big River Steel mill to peer Nucor if the deal is completed, however, details of the possible transaction have not been made public. Based in Arkansas, Big River uses electric arc furnaces, which are less polluting than other major U.S. Steel assets that rely on conventional furnaces and the use of coke.
U.S. Steel and Nippon have filed suit to overturn President Biden’s decision and have also separately sued Lourenco Goncalves, the CEO of Cleveland-Cliffs, and United Steelworkers Union President David McCall, accusing them of conspiring to kill their deal. The U.S. Steel-Nippon merger has the support of several mayors in the Mon Valley who with Nippon Vice Chairman Takahrio Mori vowed to take their case to President-Elect Donald Trump. Goncalves said he believes he can sway the mayor to his side. “They just didn’t have the opportunity to work with us, but they will, and I’m sure, 100-percent sure, that they will all support me and we’re going to make U.S. Steel as great as it was before,” he said.
With Nippon and U.S. Steel headed to court, the future of steelmaking in the Mon Valley region of Pennsylvania remains in flux as the war of words continues to heat up.
Manufacturing Jobs Most in Demand: Technological advancements continue to reshape the manufacturing labor outlook. Smart factories and artificial intelligence integration are boosting productivity and customization. However, these trends have been at odds with the industry’s ability to attract and retain talent. Finding talent is one thing, but attracting workers who can understand and apply the new technologies is the real challenge.
The adoption of Industry 4.0 technologies is pushing the demand for these positions, yet, manufacturers are struggling to find workers with the required expertise in advanced technologies, such as auto automation, robotics, data science, etc. Whether it’s repair or maintenance workers, testers, or data analysts, a growing number of manufacturing roles are expected to command a basic understanding of the new equipment and environments they’re working in. On the other hand, workers are looking for opportunities that offer expansive training and that lead to future career options. Today, many workers don’t see manufacturing jobs, especially ones that require increasingly niche skills, as meeting those needs.
Key occupations that manufacturers are looking to fill are maintenance and repair workers. People need to be able to maintain and repair more complex types of machines, such as 3D printers, robotics, and automation equipment, and understand how that type of equipment can be sustained within an operation. People on the front lines of manufacturing work, such as inspectors, testers, and sorters are also in high demand. As with maintenance work, these roles increasingly demand technical expertise.
To attract the necessary talent, manufacturers must be able to draw a clearer connection between the industry and people’s existing interests and talents. Manufacturing is a tough industry for people to see how their interests in products or industries, and their skills and abilities, equate to manufacturing. Employers must also make upskilling accessible and show employees how such skills can be useful beyond just their immediate roles. Importantly, workers should be confident that they can carry such skills with them throughout their lives and that they position them with options for future advancement.
Upward Trend in Machine Tool Orders Continues: According to the Association for Manufacturing Technology (AMT), U.S. machine shops and other manufacturers ordered $448.8 million worth of capital equipment during November, representing a 16.8% increase from October and up 12.4% from November 2023. This growth raises the 11-month total for manufacturing technology orders to $4.18 billion, which is 5.7% less than the same period in 2023.
The above information comes from AMT’s U.S. Manufacturing Technology Orders report, which summarizes purchases of metal-cutting machinery and metal-forming and fabricating machinery nationwide, and in six regions. The report serves as an indicator of future manufacturing activity because it quantifies machining operations’ investments in preparation for new production programs. AMT noted that the November results, which continue the upward trend in orders that first appeared with the September 2024 report, are nearly 30% above a typical November, and represent the highest order level for any November since 2021. “This is further evidence of the lengthened buying cycle for metalworking machinery in recent months,” AMT observed. The November results also show improved order activity across each of the six regions tracked by AMT’s report, with all of them marking increases from October.
Also worth noting is that November manufacturing technology orders from contract machine shops, the largest segment of the customer market, were at their highest level since March 2023. “This is a welcome sign for the larger manufacturing sector, as these shops typically receive additional work when OEMs experience capacity constraints,” AMT reported. By contrast, aerospace manufacturers’ orders fell from October but are still ahead of their 2024 average, indicating the effects of the nearly two-month strike of Boeing machinists likely only shifted demand.
General Motors Announces 1,000 Layoffs: General Motors (GM) recently confirmed that it will lay off 1,000 workers, primarily white-collar employees, as part of a global cost-cutting strategy aimed at maintaining its position in an increasingly competitive automobile industry. The company offered buyouts to white-collar workers with at least five years of service, and global executives who have been with the company for at least two years. GM said it couldn’t completely rule out layoffs in the future, saying that “involuntary separations are not a consideration at this point.”
“We need to optimize for speed and excellence,” the automaker explained. “This includes operating with efficiency, ensuring we have the right team structure, and focusing on our top priorities.” GM and other automakers have been navigating an uncertain transition to electric vehicles both in the U.S. and worldwide, trying to figure out where to invest capital and how fast the switch will happen. The company has had to develop and update gas-powered models while investing in EV battery and assembly plants as well as minerals and other parts for the next generation of electric vehicles.
As GM adjusts its workforce and operational strategies, it continues to focus on innovation and efficiency to meet the demands of a rapidly changing industry. While the layoffs signify a difficult moment for employees, the company maintains that these steps are necessary to position itself for long-term success in an era defined by EV growth and technological transformation.
Manufacturing Industry Performance and Outlook
U.S. manufacturing output surged in December due in large part to the rise in Boeing’s production following the end of a crippling strike by factory workers. According to the Federal Reserve, December factory output increased 0.6%, following a 0.4% rebound in November. Economists polled by Reuters had forecast production rising 0.2% after a previously reported 0.2% gain.
In December, production of aerospace and miscellaneous transportation equipment vaulted by 6.3%, reflecting the end of the strike referred to above. In addition, improvement occurred in the output of several other sectors, including utilities, mining, industrial production, and both durable and nondurable manufacturing. During the same period, motor vehicle and parts output fell by 0.6%.
The Institute for Supply Management’s Purchasing Managers Index rose to a nine-month high in December. However, there is some concern that broad tariffs on imported goods planned by President Trump could raise the costs of raw materials and undermine any recovery.
Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, rose to 77.6% from 77.0% in November but is 2.1% below its 1972–2023 average. The December operating rate for the manufacturing sector rose to 76.6% from 76.2% in the prior month. However, it is 1.7% below its long-run average.
On a year-over-year basis production at factories was unchanged in December, but fell at a 1.2% annualized rate in the fourth quarter after contracting at 0.8% in the prior quarter. Manufacturing, which accounts for 10.3% of the economy, has largely stabilized in recent months after the U.S. central bank started cutting interest rates.
After navigating a prolonged period of economic challenges, the U.S. manufacturing sector is on the cusp of a significant recovery. Looking forward, projections for 2025 reveal a 4.2% increase in overall revenues, coupled with a 5.2% rise in capital expenditures and modest employment growth. These optimistic predictions reflect the sentiment of industry executives who foresee improved business conditions ahead.
The anticipated rebound follows years of contraction driven by inflationary pressures, supply chain disruptions, and aggressive monetary policy tightening. However, a combination of favorable economic indicators, technological advancements, and strategic investments is poised to reignite the sector’s momentum.