MANUFACTURING
LOOKING AHEAD TO 2025
Trump Administration Will Create Challenges and Opportunities for Manufacturers
2024 PREDICTIONS RECAP
We will see both challenges and opportunities for growth once the new administration takes office in 2025. • Tariffs Could Impact Sector: A central pillar of Trump’s campaign was revitalizing American manufacturing by encouraging “Buy American” efforts – and tariffs are anticipated to play a significant role. Manufacturers should plan now for their impact, both with respect to purchasing necessary materials to continuing (or expanding) operations and demand for goods domestically. If significant tariffs are instituted, domestic manufacturers will be forced to look closely at supply lines and could see an increase in demand against equivalent imports. • America-First Policies: Additionally, Trump placed a heavy emphasis on American manufacturing, specifically targeting some company’s plans to move some production from the Midwest to Mexico. While it’s unclear what specific steps outside of tariffs the incoming administration may take, manufacturers should pay close attention to the evolution of this point of emphasis as it relates to any offshoring plans. • Stricter Immigration: Lastly, manufacturers are already facing a very tight labor market. The Trump administration’s heavy emphasis on tightening immigration could place a heavier strain on hiring efforts. Manufacturers would be well served by focusing on retention efforts now since the labor pool may further contract in 2025. We’ll See Widespread Deregulation The incoming Trump administration has plainly stated its intention to minimize regulatory burdens on production. The Biden administration issued environmental and labor regulations that heightened the burdens for manufacturers in a number of ways. 2025 will see a renewed effort at deregulation similar to the first Trump administration, during which it accomplished 22 acts of deregulation for every act of regulation in the first year alone. In this type of shifting landscape, manufacturers must regularly monitor policy announcements and updates from relevant government agencies to anticipate changes and understand their potential impact on operations. This is also the time to participate in industry associations and forums that provide insights and advocacy on regulatory matters. Continued Adoption and Evolution of Technology With generational technological changes happening every other year, manufacturers must continue to adapt to, adopt, and evolve the technological tools available to them. Prior investment by the Biden administration through the CHIPS and Science Act should begin paying tangible benefits to manufacturers seeking access to semiconductors and other key component parts necessary to drive their production efforts forward. Additionally, continued development and expanded application of AI tools will create areas of opportunity for manufacturers outside of direct production applications. Areas like marketing, people management, and analysis are witnessing rapid changes and innovation. Manufacturers will be well served by investing in and exploring these tools in 2025.
Union Walkthrough Rule Started to Have an Impact
We predicted that OSHA’s union walkthrough rule would have an impact on the manufacturing sector. Early data shows this to be accurate. According to the NLRB, election petitions increased by 27% in FY2024 compared to the previous year – and last year’s total (3,286) was more than twice what we saw just a few years ago in 2021 (1,638). While overall union membership rate in the manufacturing sector has declined over the past few decades, 2024 witnessed significant unionization activities across the industry, particularly in the automotive field.
Manufacturers Looked South for Opportunities
HOW’D WE DO ON OUR PREDICTIONS?
We also predicted that sweeping labor reforms in Mexico would lead manufacturers to turn their attention south of the border once again. We were right. Manufacturing operations increasingly shifted to Mexico to the point where over 90% of North American manufacturers have relocated at least some production or supply chain there. AI Increasingly Prevalent in the Industry We were also correct in predicting that AI would be used to optimize workforce allocation, scheduling, supply chain processes, safety monitoring, and predictive maintenance with increasing frequency in 2024. A September report highlighted the transformative nature of AI over the past year – and describes what we can expect in the next decade.
We got the predictions RIGHT
Colin P. Calvert
Stephen C. Mitchell
Irvine Partner and Co-Chair, Manufacturing Industry Practice Group ccalvert@fisherphillips.com
Columbia Regional Managing Partner and Co-Chair, Manufacturing Industry Practice Group smitchell@fisherphillips.com
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