As we step into 2025, plant managers in the Europe face a dynamic landscape shaped by economic shifts, technological advancements, and evolving consumer preferences. Here are the six key trends poised to influence the manufacturing sector this year:
Trend 1: Improving Economic Outlook
The Eurozone’s economic recovery is gaining traction. Interest rates and inflation are beginning to stabilize after several turbulent years, and the outlook for the Eurozone remains cautiously optimistic despite ongoing trade tensions.
However, the volatile business climate underscores the need for manufacturers to fully understand their cost prices. This includes factoring in energy use, spillage, and waste into overall production costs. Achieving cost efficiency requires optimizing production processes and monitoring waste as part of the industry-standard KPI: Overall Equipment Effectiveness (OEE).
Trend 2: Supply chain re-evaluation
The traditional just-in-time supply chain model, long a staple of the industry, is undergoing significant re-evaluation. Events like the COVID-19 pandemic and geopolitical tensions have highlighted vulnerabilities in global supply chains, prompting a shift towards just-in-case strategies.
This transition involves building larger inventories, which enhances resilience but increases costs. Technologies such as automation and advanced inventory monitoring tools are becoming crucial to managing these changes effectively. Additionally, the trend of ‘friend-shoring’—relocating supply chains to geopolitically stable countries—is gaining momentum. Coupled with rising consumer demand for supply chain transparency, this shift underscores the importance of agility and adaptability in modern supply chain management.
Trend 3: Sustainability as a Business Imperative
Sustainability remains a cornerstone of the manufacturing agenda, driven by both market opportunities and regulatory pressures. Consumers are demanding transparency on food miles, ethical practices, and environmental impact. Skepticism around greenwashing has led to a desire for hard data, such as energy use per product.
On the regulatory side, the EU’s Energy Efficiency Directive and Corporate Sustainability Reporting Directive (CSRD) compel manufacturers to monitor and reduce energy usage while reporting on sustainability practices. For manufacturers, aligning with these trends is no longer optional but essential for maintaining competitiveness.
Trend 4: Focus on Energy Efficiency
Energy costs remain a critical concern for manufacturers. While energy-efficient technologies and practices offer a path to cost savings and regulatory compliance, challenges persist. The overloaded electricity grid and the removal of subsidies for renewable energy projects, such as solar panels, are significant hurdles. Despite these barriers, plant managers need to prioritize energy efficiency as a key element of their operational strategy.
Trend 5: The tight labour market will drive automation
The tight labor market, especially for technical roles, is a pressing issue in many Western countries. Maintenance departments in factories are particularly affected as experienced staff retire. Automation is increasingly seen as a solution, not a threat, to these challenges. Robots and automated systems are taking over repetitive tasks, enabling human workers to focus on creative and strategic roles.
The benefits of automation include:
- Increased production efficiency
- Reduced reliance on a limited labor market
- Consistent quality and safety
- Predictable resource use and waste reduction
By leveraging automation, manufacturers can enhance productivity while creating opportunities for upskilled jobs, ensuring adaptability in a competitive landscape.
Trend 6: Smart factory technologies moving from hype to pragmatic integration
While interest in generic AI among manufacturing leaders has waned, other smart factory technologies, such as cloud computing and the Industrial Internet of Things (IIoT), are reaching mainstream adoption. This shift aligns with the Gartner Hype Cycle, where technologies mature from the “Trough of Disillusionment” to practical application.
For plant managers, integrating these technologies provides tangible benefits, including real-time monitoring, predictive maintenance, and data-driven decision-making. As AI matures further, it’s expected to re-emerge as a transformative force in manufacturing.
Conclusion
In changing times, the producers best placed to succeed are those who can switch product lines to meet consumer demands, tune recipes, optimise production processes and supply chains. The key here is to ask the right questions, gather the appropriate data, analyse it for answers and implement the required changes. At Innius we believe Industrial IoT has a major role to play in this process.
References:
https://www.ey.com/en_pl/insights/economic-analysis-team/ey-european-economic-outlook-october-2024
https://iot-analytics.com/what-ceos-talked-about-in-q4-2024-tariffs-reshoring-agentic-ai/