Five Trends Shaping Manufacturing in 2025

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[A: 00:08.3]
Happy New Year, everyone, and welcome back to the deep dive.

Feels good to be back after the break, right?

Oh, yeah.

Definitely feels good to be back.

I don't know about you, but I think everyone in manufacturing and tech felt that holiday break a bit more this year, you know, with all the craziness that's going on.

[B: 00:24.7]
Yeah, for sure.

[A: 00:25.7]
It's great to be kicking off a new year with you all. I'm feeling refreshed and ready to go.

[B: 00:30.3]
Yeah. Yeah. I think it's definitely that time of year. You know, you take a breath, reset, and kind of look for ways to improve. And I think for a lot of companies, that means reevaluating strategies and looking for the right tools to, you know, really boost their operations.

[A: 00:45.5]
Absolutely. And that's a perfect segue to our topic today. So for today's deep dive, we're going to be unpacking Deloitte's 2025 Manufacturing Industry Outlook Report. It's a pretty dense report.

[B: 00:56.8]
It is

[A: 00:57.3]
but it's packed with some really interesting insights and we're going to try to break it down for you, focusing on five key trends they've identified.

[B: 01:03.2]
Okay, sounds good.

[A: 01:04.1]
Talent, AI, Supply Chain Resilience, Smart Operations and Clean Technology.

[B: 01:09.9]
A lot to cover.

[A: 01:10.9]
It is a lot. But I think each of these areas is going to be absolutely critical for manufacturers to be thinking about in 2025.

[B: 01:17.9]
Couldn't agree more.

[A: 01:18.9]
So let's just kick things off with the first trend. Talent. I feel like workforce challenges have been a recurring theme in manufacturing for the past few years.

[B: 01:27.1]
Definitely. And while the market has cooled off a bit from the peak we saw in 2023, Deloitte's report suggests this talent challenge isn't going away anytime soon.

[A: 01:35.6]
Yeah. It feels like it's shifting though. Right? It's not just about finding enough people anymore. It's about finding people with the right skills.

[B: 01:42.2]
Absolutely.

[A: 01:42.8]
And then there's this huge cost associated with worker turnover. The report mentioned that replacing just one skilled worker can cost anywhere from $10,000 to $40,000.

[B: 01:52.4]
Oh, wow. Yeah. That's a big number.

[A: 01:55.2]
Yeah. It makes you realize that reducing turnover isn't just about saving money.

[B: 01:59.4]
Right. It's about knowledge retention.

[A: 02:01.5]
Exactly. It's about keeping that expertise within your company.

[B: 02:04.9]
Makes sense.

[A: 02:05.8]
So how are companies supposed to tackle this challenge?

[B: 02:08.1]
Well, Deloitte points to a surge in the use of advanced workforce management software.

[A: 02:12.7]
Interesting.

[B: 02:13.2]
They're predicting over 80% of large companies will be using it by 2025.

[A: 02:18.1]
Wow. That's a pretty big jump. So what exactly is this advanced software? Alright, it's not just your typical time and attendance tracking anymore.

[B: 02:26.1]
Yeah, Gotta be more than that these days.

[A: 02:28.2]
We're talking software that can help companies capture worker sentiment, analyze performance data.

[B: 02:33.7]
Oh, wow.

[A: 02:34.2]
And even predict future skill needs.

[B: 02:36.3]
So you can get ahead of the curve before those skill gaps even become a problem.

[A: 02:40.0]
Exactly. It's about using data to make more informed decisions about hiring training.

[B: 02:45.7]
Yeah, that proactive approach makes a lot of sense.

[A: 02:48.9]
And I think it can have a big impact on employee retention too.

[B: 02:52.2]
How so?

[A: 02:53.6]
Well, if employees feel like their skills are being developed and they have opportunities for growth.

[B: 02:58.0]
Right. They're more likely to stay.

[A: 02:59.8]
Exactly. It creates a more engaged and motivated workforce.

[B: 03:03.0]
It's a win win for everyone involved.

[A: 03:05.0]
Okay, so we've got the workforce angle covered. Let's move on to trend number two. AI and generative AI in manufacturing. Now, this is a topic that always generates a lot of buzz.

[B: 03:16.8]
It does sometimes. Feels like every other headline is about AI these days.

[A: 03:20.3]
Right. And I think there's a lot of hype out there, but Deloitte seems to be urging a more measured approach.

[B: 03:26.5]
Yeah, they emphasize the need to look beyond the hype and really focus on finding the real value. The tangible ROI.

[A: 03:33.5]
Exactly. It's not about jumping on the bandwagon just because everyone else is.

[B: 03:37.1]
Right. You gotta be strategic about it and figure out where AI can actually make a difference in your business.

[A: 03:42.4]
So where are manufacturers actually finding this real value? What are some concrete examples?

[B: 03:48.0]
Well, one area that's ripe for AI implementation is customer service. You know, companies have mountains of data.

[A: 03:54.8]
Just sitting there, like call logs, emails, warranty information.

[B: 03:58.5]
Exactly. And AI can help you unlock all that data, turn it into actionable insights.

[A: 04:04.6]
So instead of having to dig through all that information manually, You could have an AI powered system that analyzes it and provides quick and accurate answers to customer inquiries.

[B: 04:13.3]
Like a super powered FAQ section that can actually solve your problem, not just point you in the right direction.

[A: 04:18.7]
I like that analogy. And it's not just about customer service. The report highlights the potential for AI in product design as well. Well, they talk about software that can analyze your entire engineering archive. Like decades worth of blueprints and schematics.

[B: 04:33.3]
Wow, that's a lot of data.

[A: 04:34.6]
To identify hidden innovation opportunities. Yeah.

[B: 04:36.9]
So it's like AI is uncovering these hidden gems that humans might have missed.

[A: 04:41.0]
Exactly. It's pretty amazing. But it's important to remember that AI is only as good as the data you feed it.

[B: 04:47.5]
Right. Garbage in, garbage out.

[A: 04:49.0]
Exactly. That's why building that strong digital core is so important.

[B: 04:53.1]
Yeah, you need that solid foundation of clean, organized data to really make these AI applications sing.

[A: 05:00.1]
Okay, so we've talked about talent and AI. Let's move on to the third trend, Supply Chain Resilience. Now, this is something that's been top of mind for manufacturers for a While.

[B: 05:08.7]
Now, for sure, the pandemic really exposed the vulnerabilities of global supply chains, and we're still feeling the effects today.

[A: 05:15.0]
Yeah, things have calmed down a bit, but we're still seeing longer lead times and higher costs than we did before the pandemic.

[B: 05:21.2]
And then you have those attacks on container ships in the Red Sea.

[A: 05:24.7]
Oh, yeah, I read about those. Those have caused major disruptions and driven up shipping rates even further.

[B: 05:30.1]
It just goes to show that geopolitical tensions are now a major factor in supply chain risk.

[A: 05:35.5]
And then on top of all that, you still have the ongoing labor shortage, particularly the lack of truck drivers, which continues to impact logistics and transportation.

[B: 05:45.5]
It's a lot to juggle, for sure.

[A: 05:47.2]
So what are manufacturers doing to navigate this turbulent landscape?

[B: 05:51.8]
Well, Deloitte's report suggests a shift from a pure focus on resilience to a more balanced approach that considers both cost and agility.

[A: 06:00.5]
What does that look like in practice?

[B: 06:02.0]
Well, they're diversifying their supplier base.

[A: 06:04.2]
So not putting all their eggs in one basket.

[B: 06:06.1]
Exactly. They're also considering near shoring or reshoring options to reduce their reliance on global.

[A: 06:12.8]
Supply chains and forging stronger partnerships with key suppliers.

[B: 06:16.7]
Right. It's about building those relationships based on trust and collaboration.

[A: 06:21.0]
But technology is playing a huge role too, isn't it?

[B: 06:23.3]
Absolutely. Deloitte talks about advanced supply chain planning software that allows companies to model different scenarios, simulate disruptions, and collaborate more effectively with suppliers in real time.

[A: 06:34.2]
Sounds like those tools are becoming essential for managing risk and gaining a competitive edge in today's environment.

[B: 06:39.9]
I would say so. They give you that visibility and flexibility. You need to adapt to whatever comes your way.

[A: 06:46.0]
It all comes back to that digital core we were talking about earlier, doesn't it?

[B: 06:50.0]
Yeah. Having the right data and systems in place is crucial for making informed decisions quickly and efficiently.

[A: 06:56.5]
This is making me realize how interconnected all these trends really are. Yeah, you can't really talk about talent without talking about technology.

[B: 07:03.8]
Right. They're all intertwined.

[A: 07:05.4]
And you can't talk about supply chain resilience without talking about data.

[B: 07:09.3]
It's a complex ecosystem for sure, but I think that's what makes it so fascinating.

[A: 07:13.3]
It definitely keeps things interesting. Okay, so we've covered Talent, AI, Supply Chain Resilience. Let's move on to our fourth trend. Smart Operations.

[B: 07:23.8]
Bring it on.

[A: 07:24.9]
So Deloitte highlights the continued investment in digital technologies as manufacturers are really doubling down on their digital transformation efforts.

[B: 07:32.4]
Makes sense. I mean, that's where the industry is headed.

[A: 07:34.9]
Right. And it's not just about shiny new tech. It's about prioritizing that digital core we've been talking about.

[B: 07:41.4]
Laying the groundwork for the future.

[A: 07:42.9]
Exactly. Building that strong foundation so you can really leverage the power of all these other technologies.

[B: 07:47.8]
Like building a house. You gotta start with a solid foundation.

[A: 07:50.8]
I like that analogy.

[B: 07:51.9]
Yeah.

[A: 07:52.5]
So what are some of the specific technologies that are gaining traction in this smart operations space?

[B: 07:57.6]
Well, the report mentions Manufacturing Execution Systems or MES.

[A: 08:01.7]
Okay.

[B: 08:02.4]
The unified namespace approach to data 5G for factory communication and the model based Enterprise.

[A: 08:08.8]
Wow, that's a lot to unpack.

[B: 08:10.1]
It is. There's a lot going on in this space, but I think these are some of the key trends that manufacturers should be paying attention to.

[A: 08:17.7]
Can you give us a quick rundown of each of those?

[B: 08:19.8]
Sure. So MES is basically software that manages and monitors work in progress on the factory floor. It can help track materials, manage production schedules, and even provide real time visibility into production performance.

[A: 08:32.7]
Sounds pretty valuable.

[B: 08:33.8]
Yeah, it can be a real game changer for improving efficiency and productivity.

[A: 08:38.7]
So it's like building a common platform that allows all these different technologies to work together.

[B: 08:43.1]
Exactly. And then you have 5G which offers the speed and bandwidth needed to support the massive amounts of data being generated on the factory floor.

[A: 08:52.2]
Makes sense.

[B: 08:52.7]
Yeah.

[A: 08:53.2]
I mean, we're talking about real time data analytics, remote monitoring, all these data intensive applications.

[B: 08:58.5]
Right. 5G is going to be crucial for enabling all that.

[A: 09:01.8]
And then there's the model based enterprise. I'm intrigued by that one.

[B: 09:05.0]
This is all about moving away from traditional document based processes and using digital models to represent every aspect of the product and its production.

[A: 09:14.8]
So instead of relying on static documents.

[B: 09:16.9]
Which can be easily outdated or lost.

[A: 09:19.3]
You have dynamic digital digital models that can be accessed and updated by everyone involved.

[B: 09:24.0]
Exactly. It creates a single source of truth for all product related information.

[A: 09:28.6]
That sounds incredibly powerful for collaboration, design optimization.

[B: 09:33.1]
Absolutely. It can really streamline the entire product lifecycle.

[A: 09:36.8]
Okay, so we've covered Talent, AI, Supply Chain Resilience and Smart Operations.

[B: 09:41.5]
Yeah.

[A: 09:42.3]
Let's move on to our fifth and final trend, Clean Technology Manufacturing.

[B: 09:46.4]
This is a really interesting area because it touches on so many other trends we've already discussed.

[A: 09:50.5]
Yeah, it's about sustainability, it's about innovation. It's about meeting the evolving demands of customers and investors.

[B: 09:56.4]
Right. It's a complex landscape, for sure.

[A: 09:58.5]
So what are some of the key takeaways from Deloitte's report on clean technology manufacturing?

[B: 10:03.6]
Well, they note that while overall investment in clean tech manufacturing dipped slightly in 2024, there's still a strong commitment to electrification and decarbonization, particularly from industrial manufacturers.

[A: 10:16.4]
Because it's like they're trying to walk this tight, right?

[B: 10:19.6]
Yeah. Balancing sustainability goals with economic realities, especially.

[A: 10:24.4]
With all the uncertainty surrounding policy changes post election, it must be tough to plan effectively.

[B: 10:30.8]
It definitely adds another layer of complexity.

[A: 10:33.2]
So are companies just putting their clean tech initiatives on hold until things settle down?

[B: 10:38.0]
It doesn't seem like it. Our analysis of investor reports shows that industrial companies are increasingly mentioning electrification and emissions reduction in their strategies.

[A: 10:47.1]
So they're not backing down from their commitments?

[B: 10:49.0]
Not at all. And it's not just driven by internal goals. Customer demand is playing a big role too.

[A: 10:54.2]
Like consumers are demanding more sustainable products.

[B: 10:56.8]
Exactly. And for industrial companies, a lot of their customers are setting their own sustainability targets.

[A: 11:02.4]
So there's pressure from both sides of the equation.

[B: 11:04.5]
Right. It's this interesting convergence of supply and demand that's driving the clean tech trend forward.

[A: 11:10.1]
But there's still the issue of the green premium. Right. Clean technologies often cost more.

[B: 11:15.3]
That's true. And in a climate of rising costs across the board is a valid concern.

[A: 11:21.3]
Right. It raises the question, can customers afford to pay extra for green options?

[B: 11:27.0]
It's a tough question, and it's something manufacturers are grappling with.

[A: 11:31.0]
So what are some potential solutions?

[B: 11:32.7]
Well, Deloitte suggests that falling interest rates could help.

[A: 11:35.8]
How so?

[B: 11:36.6]
If borrowing becomes cheaper, it could spur investment in both clean tech development and adoption.

[A: 11:42.5]
So there's a potential silver lining there.

[B: 11:44.2]
It's something to watch for. Sure.

[A: 11:45.8]
Well, this has been a great overview of the five key trends outlined in Deloitte's report.

[B: 11:50.4]
It's a lot to digest.

[A: 11:51.8]
It is, but I think it gives us a good framework for thinking about the challenges and opportunities facing the manufacturing industry in 2025.

[B: 12:00.0]
Definitely a lot to be excited about, but also a lot to be mindful of.

[A: 12:03.9]
covered a lot of ground today, but hopefully our listeners feel a bit more equipped now to understand the forces shaping this industry and to.

[B: 12:11.7]
Make informed decisions that will position their businesses for success in the years to come.

[A: 12:17.2]
And before we sign off, I want to take a moment to thank our sponsor, MASS Group

[B: 12:21.2]
Yes, big thanks to MASS Group for making this deep dive possible.

[A: 12:25.4]
Their commitment to helping manufacturers navigate the digital landscape is invaluable.

[B: 12:30.4]
Couldn't agree more. They're doing some really great work in this space.

[A: 12:33.6]
So to all our listeners out there, thank you for joining us on this journey.

[B: 12:37.3]
It's been a pleasure.

[A: 12:38.3]
We'll be back soon with another deep dive into a topic that matters to you. Until then, keep learning, keep innovating and keep pushing the boundaries of what's possible in the world of manufacturing.

[B: 12:49.3]
And Happy New Year.

[A: 12:50.3]
Happy New Year.