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Article

Trends, opportunities, and challenges in manufacturing in 2024 and beyond

July 14, 2024 · Authored by Nicole Jura and Gregory Pfahl

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  • Manufacturing

A version of this article appeared in the Denver Business Journal on July 1, 2024.

The manufacturing industry is a dynamic landscape, constantly evolving under the influence of emerging trends and shifting market conditions. Through 2024 and beyond, several key trends are shaping the future of manufacturing, creating both opportunities and challenges for businesses.

Businesses must stay abreast of these trends and adapt their strategies accordingly to navigate what lies ahead.

Trends impacting the manufacturing industry

There are several trends including re-shoring and private equity (PE).

Re-shoring or near-shoring

One of the major trends impacting the industry is the re-shoring or near-shoring of manufacturing facilities, as the United States seeks to reduce its dependency on China.

This trend is being accelerated by recent legislation such as the Inflation Reduction Act (IRA) and Creating helpful incentives to produce semiconductors for America (CHIPS) and science act, which aim to boost domestic manufacturing, particularly in the clean-tech sector.

Predictions suggest that the effects of these bills will start to manifest in 2024 and 2025, with regions in California, Arizona, Colorado, and Texas expected to reap the most benefits.

Private equity

PE is another significant trend, with more PE firms investing in middle-market businesses.

The infusion of PE adds resources, creates operational efficiencies, and accelerates automation and technology. One of those resources is access to capital, which may be a challenge for certain manufacturers. That capital could be used to automate or otherwise create efficiencies in the business and its growth.

Nicole Jura profile photo

Nicole Jura

Principal

Baker Tilly Professional

Gregory Pfahl

Principal

Related sections

  • Manufacturing

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.

M&A activity

While the expansion of PE into middle-market businesses continues, rising interest rates and tight lending conditions have cooled M&A activity in recent months.

M&A activity is expected to remain flat in 2024.

Manufacturing and technology

The advent of Industry 4.0, characterized by the integration of technologies into manufacturing and industrial processes, is blurring the lines between manufacturing and technology.

Opportunities and challenges

These trends present both opportunities and challenges for businesses in the manufacturing industry.

  • Labor market. One of the key challenges is the tight labor market, with competition for talent escalating. This has led to a dramatic increase in wages over the last few years, a trend that’s likely to accelerate automation and technology within manufacturing processes.
  • Cash flow. Businesses can leverage federal funding, tax credits, and incentives to boost cash flow.
  • On-Shoring. Semiconductor manufacturers and suppliers, in particular, stand to gain from the on-shoring efforts, with significant opportunities expected in 2024 and beyond.
  • Digital transformation. Companies also stand to benefit from integrating or upgrading to new systems, enhancing capabilities and reporting, and focusing on dashboarding and cybersecurity.
  • Tax Planning. As businesses look to near-shore, international entity consultation and tax planning services could provide valuable guidance.

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