It’s always something. For years after coming out of Covid, historically high material and wage inflation pushed profits into tough territory for many manufacturers. Not to mention supply chain issues, labor shortages and a pandemic virus further complicating the already demanding task of running a manufacturing business. What new obstacles will manufacturers face in 2025?
According to Chief Executive’s latest polling, manufacturing CEOs expect rising costs to be their biggest challenge in 2025, with a resounding 70 percent of the manufacturers polled saying that it tops the list—miles ahead of challenge No. 2: retaining and engaging employees. CEOs in industries other than manufacturing also ranked rising costs as their top challenge of the year, however, there was no majority consensus, with the top choice receiving only 41 percent of the vote, just 1 percent above their second choice, which is also employee retention.
The main driver of concern around costs? Proposed tariffs from the new administration. These tariffs are especially concerning to manufacturers, as it’s common to not only import materials and supplies from foreign countries but also to export.
“The real threat and probability of tariffs is driving supply side and price increase analysis and project activity. Rather than focus on new product development and growth, the uncertainty is driving resourcing and other non-value-added distractions,” says the CEO of a mid-to-large manufacturer of farm, military and automotive industrial goods.
Aside from CEOs of other industries not being quite as concerned about rising costs as those in manufacturing, another difference is where they rank the importance of AI. Non-manufacturing CEOs rank leveraging AI and new tech as the third biggest challenge for the year, with 37 percent of the vote, while it’s in fourth place—after recruiting people for open positions—for those in manufacturing. Recruiting people for open positions is fifth place on the non-manufacturers’ list of challenges.
These forecasted challenges aren’t too far off from the priorities that manufacturers ranked in January 2024, although none of them had 70 percent agreement. Instead, the majority of CEOs forecasted inflation pressure, retaining and engaging employees and recruiting people for open positions to be their top three challenges of the year.
Despite employee retention being the No. 2 challenge again this year, concern has diminished, with only 43 percent of manufacturing CEOs ranking it as a challenge versus 51 percent last year. However, recruiting people for open positions received a higher proportion of the vote this year compared to last, with 41 percent versus 36 percent, respectively.
The differences between the business of consumer manufacturing and industrial manufacturing explains why their top challenges for 2025 are also very different.
While the issue of rising costs is ranked as the top challenge for all manufacturers, a whopping 74 percent of those in the industrial sector are concerned, compared to 60 percent in consumer, which is still a resounding majority.
“The current undertones of potential tariffs are affecting decisions from our core customers. Some are ignoring the potential effects, and some are already making adjustments,” says John W. Gessert, CEO and president at American Plastic Toys.
The real difference comes when examining the split between their next biggest challenges. Tied for second place for consumer manufacturers is leveraging AI, passing price increases through to customers and supply chain disruptions, all with one-third of the vote. Industrial manufacturers, on the other hand, are more concerned with employee-related challenges such as retention (52 percent), recruitment (48 percent) and the rising cost of healthcare (39 percent).
Another big gap is the proportion of CEOs that said keeping up with customers’ changing needs would be a challenge this year, with 27 percent of those in consumer manufacturing listing it as a concern and only 19 percent in industrial doing so. It also seems as though some consumer manufacturers have continued remote work, as 27 percent see returning people to the office as a challenge in 2025 compared to none who said the same in industrial manufacturing, where much more of the work requires employees to be on-site.
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Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process
Executives expressed frustration with their current strategic planning process. Issues include:
Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns. They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning. Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process. This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented. If you are ready for a Strategic Planning tune-up, select this workshop in your registration form. The additional fee of $695 will be added to your total.
2:00 - 5:00 pm
Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations.
Limited space available.
10:30 - 5:00 pm
General’s Retreat at Hermitage Golf Course
Sponsored by UBS
General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.
The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.