Manufacturing trends for 2025 are continuing to shift.
It’s been a turbulent six months since Spaulding Ridge published our initial outlook on the manufacturing trends that would shape 2025. The National Association of Manufacturers’ recent survey showed that from Q1 to Q2, optimism dropped nearly 15 points, with trade uncertainty cited by 77 percent of respondents as their top concern.
Priorities have shifted, and a lack of predictability makes planning for the back half of the year challenging. While some of our guidance from six months ago still applies (IoT-enabled machinery still offers plenty of useful information, for instance), ever-changing circumstances will require new strategies to adapt.
To help guide you through the rest of the year, we’ve taken stock of what’s been occurring, as well as what may arise. This list covers both strategic and technical challenges, with recommendations for how to react.
Tariffs have dominated the discussion.
You can’t talk about the first half of 2025 without talking about tariffs. For months, manufacturers have had to navigate on-again-off-again global trade regulations. These constant shifts in manufacturing trends for 2025 have made it hard for leaders to predict and plan, with regulatory changes moving faster than their supply chains can adapt.
In this landscape, manufacturers that have adopted more powerful planning capabilities have had an advantage over their competitors. Companies that understand how a change in regulations will affect them before it happens can develop mitigation strategies, sourcing goods from less regulated markets or shifting their manufacturing operations to maintain profitability.
In our work with numerous manufacturers, we’ve found that a single view on the effects of tariffs is invaluable. Manufacturing leaders need to be able to quickly assess the impact of tariffs and evaluate strategies. In response, we’ve developed a tariff planning solution that gives teams what they need to navigate change.
This solution can be the starting point for your tariffs strategy, giving you an at-a-glance view of the impact of various current or potential regulations. Still, as manufacturers have learned, there’s no one-size-fits-all tariffs strategy.
Different manufacturing sectors face different challenges from tariffs.
Not all manufacturers have been affected equally by tariffs. Depending on a company’s geographical footprint, margins, supply chain complexity, manufacturing time, regulatory oversight, and raw material needs, they may either be well-positioned to thrive or at serious risk.
Biotech and pharmaceuticals
Biotech and pharmaceutical companies have faced unique challenges as tariff policies have shifted. These industries, which traditionally import their raw materials from overseas suppliers, are now grappling with the potential impact of increased tariffs on their supply chains and production costs.
Historically, pharmaceuticals have often enjoyed exemptions from tariffs, allowing companies to maintain relatively stable pricing and production strategies. However, the landscape is changing, and many are now having to scramble to respond to potential threats to their established business models. Some companies are exploring the option of relocating their manufacturing facilities to avoid tariff-related costs, while others are looking to adjust their production processes or sourcing strategies. Despite these efforts, it remains too early to determine the long-term effects of these trade policy changes on the biotech and pharmaceutical industries.
Semiconductors and high-technology products
Semiconductor manufacturers have long been accustomed to navigating geopolitical risk. For years, these companies have operated under strict export controls, particularly for advanced chip technologies. These restrictions have already prompted significant efforts in friendshoring and reshoring, as manufacturers seek to mitigate risks and ensure stable supply chains. However, tariffs are now exposing semiconductor manufacturers to risks from unexpected quarters. This development is particularly concerning given the critical role semiconductors play in a wide range of products, from smartphones to industrial equipment. As a result, the impact of these tariffs is likely to ripple, increasing costs broadly.
Despite the pressure to adapt, the highly specialized nature of semiconductor production makes it difficult to quickly shift operations to new locations. The same technological sensitivities that make semiconductors so valuable also create significant barriers to relocating or diversifying production facilities, leaving manufacturers in a precarious position as they attempt to navigate this evolving trade landscape.
AI-powered automation is reshaping unexpected areas.
In response to rising costs of both raw materials and labor, manufacturers are increasingly turning to AI automation. By automating repetitive tasks, manufacturers can improve efficiency, reduce errors, and reallocate human resources to more complex and value-added activities. As companies consider moving production to the US, they’ll rely heavily on automation technologies to offset higher labor costs and maintain profitability.
Early adopters are also exploring how agentic AI can play a role in their business. While agents currently see most use in customer service and IT automation, some companies, like PepsiCo, have also put them to use as part of supply chain operations. AI agents can make autonomous decisions on purchasing, risk management, contract negotiation, and other areas. As agentic AI improves, it’ll find even more uses within supply chain management and beyond—so manufacturing organizations should start planning now.
While the move towards AI-powered automation predates the recent tariff hikes, current events will accelerate this trend. Already, AI has transitioned from an emerging field to a major driver of innovation and efficiency. Manufacturers should quickly start exploring what AI capabilities they can access already through their existing tools. Over the long-term, meanwhile, they’ll need a strategy to fully capitalize on the potential of AI.
Manufacturers are using more external data for forecasting.
One thing that always helps to clear up an uncertain situation: Gathering more data. In addition to using their own data more wisely, many manufacturers are leveraging externally available data to guide decisions and gain broader insights into trends that may impact their performance.
While every company’s needs are unique, trial and error can help reveal correlations between external factors and a company’s own performance. Manufacturers should identify approximately ten macroeconomic factors that they believe may impact their business—basic metrics like GDP growth, inflation rates, and consumer confidence indices, or industry-specific metrics relevant to their sector. Next, determine what data is readily available, either publicly accessible or for sale through pre-existing vendors or service providers. Just focus on data sources that are reliable and regularly updated.
With the selected data, manufacturing organizations can then measure correlations between these external factors and their own performance metrics. This analysis may reveal surprising insights about which external indicators have the strongest relationship with the company’s key performance indicators—a manufacturer might discover that changes in a particular commodity price have a stronger correlation with their profit margins than they had previously realized—or it may reveal a lack of correlation. Either way, companies can then determine how to best use these metrics in their decision-making processes.
It’s important for manufacturers to iterate. They should continuously monitor the metrics that prove to be useful predictors of their performance and refining and adjusting as needed. By leveraging publicly available data in this way, manufacturing organizations can better anticipate market shifts, identify emerging trends, and make more informed strategic decisions.
Earnings guidance is harder to provide, but still valuable.
Public manufacturing companies have tried various tactics to continue to provide earnings guidance. Some have kept guidance processes unchanged, some have provided guidance with caveats, some have shared conditional guidance, and some have abandoned the process altogether. We recommend that companies be as accurate and complete as they can with their guidance, and to communicate proactively when new information arises. By doing this, companies can keep their investors better informed and build more trust within the marketplace through greater transparency.
To do this, manufacturers need a strategy. In our work with clients, we’ve found that three technical competencies, ranging from basic to advanced, will give companies a better groundwork to provide guidance:
- Basic: Data Readiness. It’s hard to give good earnings guidance when you don’t have reliable numbers to work with. Investments in data quality and data comprehensiveness will make the entire guidance process that much smoother.
- Intermediate: Scenario Planning. Once accurate data is in place, companies need to be able to perform “what if” analyses and to estimate how different circumstances might shift earnings numbers. Having this capability makes it easier not only to plan, but to provide updated guidance as circumstances change.
- Advanced: AI-Enabled Solutions. Adding AI to the mix can provide another measure of precision and efficiency by automating manual planning efforts, spotting patterns sooner, and providing plain-language answers to queries. Depending on a manufacturer’s needs, there are numerous ways to incorporate AI for better outcomes.
Even as circumstances change, manufacturers should aim to get their earnings guidance at least directionally correct. They can take comfort that any investments here will have longer-term benefits down the road.
Be prepared: manufacturing trends for 2025 will keep changing.
While predicting what the manufacturing world will look like six months out may feel like a futile exercise, companies should prepare for continued uncertainty. Manufacturers should build up their capacity to extract insights from their data and to turn those insights into strategic decisions. By being agile, manufacturers can adopt to whatever happens.
This can be a team effort. Hundreds of manufacturers have turned to Spaulding Ridge for help with planning, data management, SPM, AI, and more. If you need your technology to provide your manufacturing business with increased harmony between systems, greater clarity into your circumstances, and the ability to re-allocate time to your highest priorities, reach out to us.
