Trends in manufacturing: Smart manufacturing takes center stage with mounting economic uncertainty

• Today, manufacturing is at an inflection point, with moderate growth expected in the near term but also economic uncertainty on the horizon.
• Smart manufacturing—using technologies such as Internet of Things-enabled sensors, artificial intelligence and automation, and data analytics can help U.S. manufacturing produce more competitively.
• Managed service providers can help manufacturing speed implementation of technologies, integrate legacy and new technologies, provide the necessary cybersecurity and risk controls, ensure higher productivity with these tools and lower downtime, and help manufacturers comply with key regulation requirements.

Today, trends in manufacturing are evolving rapidly—driven by recent shifts in trade policy, rising economic uncertainty, and technology advancements.

While U.S. manufacturing observers estimate modest growth in the industry, in 2025, the economic backdrop for the industry remains unclear. Concerns over trade policy continue to mount, and raw material costs have increased. According to the “2025 First Quarter Manufacturers’ Outlook Survey,” respondents expect sales to increase 3.4% over the next 12 months but also expect raw materials prices and other input costs to increase 5.5%. Input costs can reduce profit margins for manufacturers over the next 12 months and beyond.

And 57% of manufacturing managers and executives cited cost as their biggest barrier to investing in IT modernization and cybersecurity.

Further, in Q1 2025, 76% of manufacturers cited trade uncertainties (e.g., actual or proposed tariffs, trade negotiations uncertainty) as their top business challenge, followed by increased raw material costs (62.3%) as the second highest concern.

Given the economic landscape, U.S. manufacturing facilities have—or will need to turn more heavily to the latest technology trends to gain competitive edge and improve margins. The industry needs to employ elements of smart manufacturing: Internet of Things-connected sensors, automation, data analytics, and other technologies to make their supply chains smarter and facilities primed for dynamic workforces.

“There is widespread and growing confidence that smart manufacturing and operations will be an indispensable factor in productivity and enterprise growth,” noted Deloitte in “2025 Smart Manufacturing and Operations Survey.”

According to the same report, 92% of manufacturers surveyed said that, over the next three years, smart manufacturing will be the main driver for competitiveness. And according to the Integris report Technology automation will be important to reducing costs. At the same time, 51% of manufacturing employees believe U.S. factories are falling behind global competitors in technology modernization and automation, according to the Integris report “2025 U.S. Manufacturing Technology Readiness Report: Ready to Lead?.”

 “The stakes are real—this is about staying competitive in the present moment,” said Joe Fetter, director of the Manufacturing Practice at Integris.

Smart manufacturing is an approach to production that employs digital technologies and interconnected systems to optimize all aspects of the manufacturing process. Smart manufacturing strives to make production facilities more efficient and adaptive to real-time events and uses technologies as the Internet of Things (IoT), artificial intelligence (AI), data analytics, and more.

Trends in manufacturing: What is smart manufacturing?

As U.S. production facilities embrace smart manufacturing, their investment priorities are focused on data insights and infrastructure, with 40% investing in data analytics, 29% in cloud computing, 29% in AI, and 27% in the industrial Internet of Things (IIoT).

According to the Deloitte report, survey respondents see the value of smart manufacturing, with up to a 20% improvement in production output and 20% in employee productivity, which serve as potential antidotes to the issues that have plagued the industry since 2020, such as supply chain imbalances and labor shortages.

“Smart manufacturing isn’t just a trend,” said  Bryan Wheeler, manager of client experience at Integris. “Smart operations is the new baseline. Manufacturers investing in analytics, AI, and IoT are setting themselves up for faster decisions, leaner operations, and stronger supply chains.”

We are seeing a shift from reactive operations to proactive, technology-driven strategies,” “Manufacturers that invest in digital tools now are setting themselves up for long-term success and stability.

Investments in smart manufacturing: How MSPs can help implement latest trends in manufacturing

U.S. manufacturing facilities are investing in the foundational technologies to implement smart manufacturing and speed production, optimize supply chains, predict demand, and use data insights for future decision making.

Let’s explore some of the key areas where investments are taking place.

Industrial IoT. According to Markets and Markets, IoT in manufacturing is expected to grow to $87.9 billion by 2026. Industrial IoT is expected to increase because it exemplifies the kind of data-driven insights that U.S. manufacturing facilities need to become more operationally efficient. IoT offers real-time data, automation, and predictive insights. It’s reshaping how manufacturers operate, from monitoring equipment, predicting maintenance needs, boosting product quality, and adapting to changes in demand, leading to more agile and responsive operations.

MSPs can help integrate industrial IoT solutions into business processes to increase efficiency and reduce errors. 

Cloud computing. The cloud manufacturing market size is expected to see rapid growth over the next few years. It will grow to $190.84 billion in 2029 at a compound annual growth rate (CAGR) of 17.2%. The growth in the forecast reflects demand for real-time insights and analytics, market dynamics, regulatory and compliance changes. Major trends in the forecast period include increased adoption of private or hybrid cloud solution, integration of edge computing with cloud manufacturing, AI and machine learning-driven optimization, focus on sustainability and circular economy, expansion of industry-specific cloud manufacturing solutions.

MSPs can significantly benefit manufacturers adopting cloud technologies by providing expertise in cloud migration, management, security, and optimization. They can help with cloud-based ERP systems, disaster recovery, and 24/7 support, ensuring smoother transitions and efficient operations. 

ERP systems and data analytics. While analytics have been part of enterprise resource planning (ERP) systems for some time, the emergence of generative AI has accelerated these capabilities. According to one estimate, 83% of ERP projects now include AI. ERP systems have evolved to provide real-time autonomous decision-making capabilities in areas such as production scheduling and supply chain optimization, predictive analytics on supply, and more. User experience also improved thanks to AI-powered voice activation and natural language processing.

MSPs can integrate sophisticated analytics software to collect operations and event data to monitor quality, increase performance and yield and optimize supply chains.

Edge computing. Increasingly manufacturing facilities use edge computing to make operations more efficient and secure. Edge computing is a distributed computing approach that brings computing resources and data storage closer to the data source, typically near the end-user device or network edge.

So, for example, an IoT sensor on the production floor doesn’t need to send data to the cloud, then back again to alert workers about a problem. Edge enables real-time decision making, where data can be analyzed in real time.

Consider a factory floor: Gathering, analyzing, and acting on data on the factory floor in real time offers profound benefits. Reducing downtime, accurately predicting maintenance, and improving overall product quality results in higher yield, reduced waste, increased throughput, and lower overall costs

AI. AI can analyze data to predict demand, optimize inventory levels, and streamline logistics, reducing costs and improving delivery times. AI can also automate repetitive tasks, in some cases with robots, freeing workers to focus on more strategic and creative work. With AI,organizations to monitor equipment health and predict when maintenance is needed, minimizing downtime and reducing costs. 

An MSP partner can customize and implement an AI model to meet a company’s specific needs. This may look like a customized predictive model that decreases equipment downtime, or it may be a model that predicts customer demand in upcoming quarters.

“Smart manufacturing is becoming as essential to competitiveness,” Fetter noted. “Most SMBs don’t have an internal tax department, and the same goes for advanced AI expertise. Internal IT teams often aren’t equipped to deploy or scale these newer technologies. That’s where MSPs step in.”

How MSPs can help organizations adopt smart manufacturing

In a time of skilled-labor shortages, rising production costs, and supply chain imbalances, partnering with a managed service provider (MSP) has numerous benefits to manufacturing businesses and can set thriving manufacturers apart from the rest. MSPs can guide manufacturers as they invest in emerging technologies and develop strategies to advance growth.

While talent investment and upskilling are taking place in-house, manufacturers are also considering outsourcing aspects of their smart manufacturing transformation and operation, particularly in areas where manufacturers are less likely to hold a core competency. According to the Deloitte survey, between 69% and 72% of respondents reported moderate to significant challenges in hiring skilled workers for IT, OT, data science and engineering, application development, and cybersecurity—all technology-focused domains. These are areas where MSPs can step into the breach and help manufacturers upskill and develop.

Consider areas in which MSPs can help boost smart manufacturing.

IoT. MSPs can help integrate industrial IoT solutions into business processes to increase efficiency and reduce errors. Industrial IoT has also fallen prey to cybersecurity breaches—with 84% of respondents to one survey reporting incidents—and MSPs can help secure these devices. According to data, 78% of organizations view MSPs as a candidate for managing IoT.

AI, robotics, and automation. MSPs can provide the industry knowledge and technology expertise to integrate robotics, vision, software and artificial intelligence (AI) solutions to help identify errors, streamline and optimize production processes. 

Business intelligence. MSPs can collect operations and event data to monitor product quality, boost performance and optimize supply chains.

Compliance and regulation. MSPs with extensive industry expertise can be trusted advisers on which machinery to purchase and which software and sensors to ensure compliance and mitigate risks. 

Support. The right MSP will provide 24/7/365 support when machinery needs service or if a cybersecurity incident strikes.

Training and change management. MSPs are uniquely positioned to provide employee training and change management support as facilities transition to smart manufacturing technologies and processes.

“ Smart manufacturing isn’t plug-and-play—it takes planning, integration, and support.,” Wheeler noted “That’s where MSPs step in—to help manufacturers navigate complexity and make the transition seamless.

For more on the U.S. manufacturing industry, check out our recent report “2025 U.S. Manufacturing Technology Readiness Report: Ready to Lead?”