Manufacturing Trends Fueling M&A in 2025

By Matt Keefe, Managing Director

It is undeniable that technological advancements have significantly transformed the manufacturing industry over the past several decades.  Businesses are innovating to meet customer demands with superior, customized products.   Manufacturers are investing in advanced technologies due to a growing skills gap.  As a result, companies are increasingly turning to mergers and acquisitions (M&A) to stay competitive.  If you throw in tariffs, reshoring and higher interest rates into the mix, the manufacturing space is being forced to adapt almost daily.  Below are a few key trends we have observed recently regarding how manufacturers are evolving in today’s competitive landscape.

AI

Artificial Intelligence (AI), and computerized maintenance management systems (CMMS) have transformed production environments into data-rich ecosystems. Today, AI-driven platforms can analyze real-time data from interconnected machines, detect patterns, and suggest process optimizations. AI enables predictive maintenance, minimizes downtime, and ensures consistent quality at scale.

On the revenue side, AI is forecasting demand through comprehensive analysis of historical customer activity, inventory levels and macro-economic factors.  This insight can spur sales people to reach out to customers at the optimal time.  Plus, it can significantly improve inventory planning, lowering working capital needs.

Unplanned downtime continues to be a costly challenge, with U.S. manufacturers losing tens of billions annually. Advanced predictive maintenance powered by AI allows companies to simulate machine behavior, forecast failures, and schedule proactive repairs. This reduces both cost and risk while improving equipment lifespan and production reliability.

Automation

Since 2019, the use of industrial robots has more than doubled, with over 3.5 million deployed globally by 2024. These systems not only improve productivity but also facilitate human-machine collaboration, a cornerstone of the next-generation factory. We anticipate the reshoring movement to only further the automation movement within manufacturing.

Cybersecurity and System Resilience

As factories become increasingly connected, they also become more vulnerable to cyberattacks. In 2025, cybersecurity is no longer optional. Manufacturers must now integrate robust security measures across their OT (operational technology) and IT systems to ensure up-time and protect intellectual property. Buyers are beginning to make IT security a focal point of their due diligence.

Workforce Evolution

The workforce has undergone a dramatic transformation. Assembly-line roles now demand skills in software, automation, robotics, and data analytics.  However, the talent pipeline has not kept pace.

According to recent industry reports, up to 2 million U.S. manufacturing jobs may remain unfilled by 2030 due to this skills gap. Today’s manufacturing employees are often engineers, data analysts, or technicians, earning salaries 25% or more above the average hourly U.S. worker. The emphasis is on lifelong learning and upskilling to keep pace with technology.

M&A

Implementing advanced technology and hiring skilled labor is expensive and time-consuming. As a result, manufacturers are pursuing M&A to:

• Acquire proprietary technologies or software platforms
• Gain access to hard-to-find skilled talent
• Expand automation capabilities quickly
• Integrate vertically to gain supply chain control

M&A activity in 2025 is expected to increase as firms pursue growth, modernization, and resilience.  This is especially true among mid-market manufacturers looking to compete with larger, tech-enabled players.

The manufacturing industry in 2025 is defined by its embrace of digital transformation and strategic adaptation through M&A. With consumer expectations rising, technologies advancing, and the labor landscape evolving, the only constant is change. Companies that fail to adapt risk falling behind, while those that strategically embrace innovation and talent acquisition through M&A are poised for long-term success

© Copyrighted EdgePoint Capital Advisors, merger & acquisition advisors. Matt Keefe  can be reached at 216-342-5863 or on the web at www.edgepoint.com.