Despite a challenging environment—from rising energy costs and volatile prices of raw materials to heightened geopolitical risks—manufacturing leaders remain optimistic about their ability to weather the storm.
Nearly half (48%) of survey respondents believe that global growth will accelerate this year, and a staggering 85%, particularly those based in North America, Brazil, and India, are confident in their company's ability to grow revenues.
However, this optimism doesn't come without caution. Economic uncertainty, which could undermine expected growth, is the top concern for 82% of respondents. Rising resource costs, including energy and raw materials, worry 73%, while geopolitical risks (72%) and cyber threats (70%) add further pressure.
In response to the fastest growing risk, cyber threat—which is up 30 percentage points over the past five years— leaders are taking action. Over half of the manufacturers plan to increase cybersecurity and IT infrastructure investments, signalling a proactive stance against these rapidly evolving threats.
However, for manufacturers, IT investment is not solely intended to shield businesses from cyberattacks. Companies are increasingly turning to novel technologies such as AI not only to mitigate risks but also to seize new opportunities for growth and innovation.
As a CTO from the Middle East observed, "With supply chain optimisation, it can optimise supply chains by predicting demand, improving inventory management, and reducing transportation cost, leading to significant cost savings."
Priorities in AI applications include process automation (34%) and customer analytics (29%), with other applications like employee training, R&D, and sales support also becoming prominent.
However, the adoption of AI is far from universal. In stark contrast to these early adopters, a quarter of manufacturers report that they do not incorporate AI into their operations at all. Additionally, it appears that not all leaders are sold on AI's promise as scepticism is rising—over a quarter of manufacturers are wary of AI technologies, a significant increase from last year’s 15%.
AI maturity in the sector is gaining momentum, with 39% of respondents either exploring AI's potential or widely deploying it to secure a competitive edge.
Still, those leveraging AI effectively report clear benefits. A North American CTO highlighted the impact of AI on employee productivity, stating, “AI that we use to optimise our employee workloads has had a positive impact. It has helped lower mistakes and improve outcomes, as well as speed up many processes.”
Improving operational efficiency is, by a wide margin, the top priority for businesses in the sector for 2025, with 72% planning to focus on this area—nearly 20 percentage points higher than any other action planned for the year.
Although over a third of manufacturers identify operational effectiveness as a key weakness, this challenge is far from universal. Interestingly, companies with profit margin growth exceeding 5% do not identify efficiency as their primary weakness. Instead, they focus on cybersecurity (cited by 39%), supply chain improvements (34%), and innovation (29%)—reflecting their already streamlined operations.
Three-quarters of manufacturers acknowledge the need to improve their business models, reflecting the inherent complexity of managing their operations. Half of respondents report that their companies are streamlining processes to standardise workflows and eliminate redundancies, while an equal share is increasing investments in automation and digitising core processes. Nearly half (49%) are optimising supply chains, 48% are focusing on enhancing organisational structures, and 46% are upgrading technology systems to modernise their operations.
Renewable energy has emerged as another critical priority, with 39% of manufacturers identifying it as a key focus, while the importance of battery storage and electrification has almost doubled since last year.
Enabling technologies like cloud computing (37%), the Internet of Things (33%), machine learning (32%), and robotic process automation (31%) are getting more traction on the shop floor, creating agile, future-ready operating models.
Innovation remains a key differentiator for manufacturers in 2025, with AI playing a critical role in driving the process. A European CISO shared, "Segmenting and analysing our customers' purchasing journey using machine learning has enabled us to personalise offers while focusing on the most profitable scenarios." Similarly, a CMO in Asia highlighted the use of AI for new product development through big data analysis.
While 41% of respondents consider themselves successful innovators—above the global average—there is still a long way to go. The majority (59%) acknowledge that their efforts are inconsistent or difficult to scale. Also, the use of AI for supply chain optimisation and quality control has seen a significant decline since last year. This shift may reflect some business leaders' challenges in integrating AI applications into existing operations or a conscious decision to ease the pressure of applying AI to every potential use case over the past 12 months.
The survey shows that the importance of investing in people has jumped by 15 percentage points over the past year.
Manufacturers are prioritising training and development, with 58% aiming to foster a culture of continuous learning. Performance management (49%) and enhanced internal communications (48%) are also high on their agenda, alongside initiatives to improve company culture and employee wellness.
AI is again emerging as a powerful tool in workforce management that can be leveraged to foster a more engaged and effective workforce.
Workforce performance and engagement remain challenging, with only 38% of respondents rating their teams as highly performing and engaged.
One North America-based CTO explains, "AI that we use to optimise our employee workloads has had a positive impact. It has helped lower mistakes and improve outcomes, as well as sped up many processes."
The survey reveals valuable lessons from the sector's most profitable businesses—those with profit margin growth exceeding 5%. These "profit accelerators" offer a glimpse into the strategies driving exceptional performance.
Analysis of the 59 most profitable manufacturers reveals that these high-margin businesses are more forward-thinking, tech-driven, and talent-focused than their peers.
Technology appears to be one of the distinctive drivers of their success, as these companies are more successful innovators (61% vs 41%). Notably, 71% plan to increase their digital transformation and technology adoption budgets in 2025, compared to just 34% of others.
These leaders also invest in talent, focusing on innovation and using AI and algorithms to optimise business operations, R&D, and sales and marketing. An executive from one of these companies shared how AI enables precision-targeted marketing, ensuring "the correct customers receive offers at the right moment."
Our latest survey demonstrates that manufacturers are risk-resilient in an environment of constant disruption, from economic uncertainty and rising costs to geopolitical tensions. Leaders are embracing technology, investing in people, and fostering innovation to build businesses fit for the future.
At HLB, we're here to guide manufacturers through this transformative journey. With our deep industry expertise and commitment to innovation, we help businesses navigate complexity and unlock new opportunities. Trust HLB to guide you through 2025; get in touch with our manufacturing industry team today.
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