American manufacturers aren’t seeing the future through rose-tinted glasses.
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About half (49 percent) of U.S.-based suppliers believe a recession will hit the market in 2025—and the vast majority (84 percent) think it will happen within the next two years, according to recent research from digital manufacturing solutions provider CADDi.
The group’s survey of more than 330 U.S. manufacturing professionals highlighted a number of headwinds facing the sector and driving down confidence in future performance, including a talent shortage, slowing speed-to-market and limited access to historical data to track trends and predict future outcomes.
More than half (56 percent) of American supply chain professionals said their organization lacks sufficient access to skilled labor , and 50 percent said they’re facing issues equipping their existing workforce with the skills to take on strategic roles. Vice president and C-Suite-level respondents cited anxieties about securing the right workforce to advance business priorities (43 percent), as well as the continual need to ensure employees are satisfied and empowered at work (30 percent).
According to the survey results, a “Great Experience Exit” is imminent, with almost three-quarters of senior executives saying they expect to retire within the next 10 years. With fewer qualified employees entering the manufacturing workforce, 68 percent of those execs said they believe at least half of their institutional knowledge will evaporate upon their departure from the industry.
“The skilled labor gap is acute. As experienced workers retire and fewer young people
enter the field, manufacturers are forced to operate with significantly fewer resources,” CADDi analysts wrote, pointing to reporting from Deloitte and the Manufacturing Institute that showed up to 1.9 million open manufacturing positions could go unfilled by 2033 if current trends persist.
The groups’ data also revealed that the dearth of talent could become a $1-trillion problem by 2030, reducing productivity, hampering research and development and dragging down speed to market—a top priority cited by 23 percent of manufacturers for 2025. What’s more, CADDi wrote that operating under a worker shortage puts pressure on current employees, impacting performance and retention.
And amid these issues, manufacturing operatives said they’re facing more pressure to onshore operations than ever before. “Navigating political demands to bring more production onshore” was cited by 51 percent of survey-takers as a top-three pressure point for their organization.
Meanwhile, 16 percent of those surveyed said decreasing reliance on China manufacturing was among the biggest pressures facing their business, while 36 percent named intensifying competition from cheaper sourcing locales and 32 percent pointed to the need to navigate supply chain disruptions.
“Manufacturers have long outsourced production to low-cost countries to capture massive labor cost advantages,” analysts wrote. “But the pressure to reduce reliance on foreign manufacturing and move these jobs—which are a cornerstone of the American economy—back to the U.S. is growing, especially as we get further into an election year and a potential recession looms.”
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Historically, there have been significant trade-offs for companies to ponder while they weigh changing up their sourcing strategies, though—”either they keep production overseas and fail to contribute to American prosperity, or onshore production, absorb higher costs, and take a hit to the bottom line.”
But according to CADDi, “manufacturers no longer need to make this choice.”
“Driving efficiencies in how procurement, engineering and sales teams access and leverage data directly increases labor productivity, which counters the cost of paying a higher wage for U.S. workers,” analysts wrote. “Manufacturers that tackle the data challenge head on can bring production onshore without a cost disadvantage and put their team in a better position to rapidly innovate.”
At the moment, though, more than one-quarter (27 percent) of American suppliers said they fear they aren’t adapting quickly enough to survive, though they are working toward evolving: 45 percent of senior managers said digital transformation was a top business pressure in 2024.
“American manufacturers are feeling pressure from every angle—the economy, talent shortage, rising competition from China and Mexico, and more. Our research indicates that data and collaboration issues are exacerbating the pressure,” CADDi CEO Yushiro Kato said. “Internal teams can’t access the information they need to do their jobs and make smart and profitable decisions fast enough, which increases the stakes for manufacturers that don’t take steps to address the inefficiencies.”
Case in point: a whopping 60 percent of procurement managers said they know they’ve sourced a part or component for their products at a higher cost because they didn’t have access to sufficient supplier data to negotiate effectively. An equal number said a lack of data surrounding historical costs precluded them from consolidating suppliers or working out a volume discount. Notably, 71 percent of sales professionals said they have quoted or sold a deal that was unprofitable for their business because they lacked the historical engineering and procurement data needed to take informed action.
“The consensus across the procurement, engineering and sales professionals we surveyed was that leveraging AI and having easy access to data from past projects would enable them to design better products faster, negotiate with suppliers to secure volume discounts, and speed up the quoting process to win new business,” Kato said.
Asked about their prevailing pain points, 73 percent of executives named inadequate documentation, from missing part numbers to dimensions and material properties as the top problem for procurement. Sales leaders said they’re encumbered by long quotation processes driven by a need to dig up relevant information (67 percent), while 33 percent said poor collaboration and communication between procurement and engineering leads to delays.
These hurdles can be ameliorated with the help of advanced technology, and it’s becoming critically important that American manufacturers prioritize digitalization, Kato added, saying, “Companies that delay their digital transformation efforts may find themselves significantly outpaced by competitors who have already harnessed the power of automation and AI.”
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