Reshoring and Labor Shortages Drive Manufacturers Toward AI Solutions

Article Summary

Nearly 72% of manufacturers have adopted AI to address reshoring pressures, labor shortages, and rising costs, but only 10% have achieved scale. Generative AI adoption jumped to 65% in 2024, with quality control, IT operations, and supply chain management as top use cases, though implementation costs and integration challenges remain significant barriers.

• 72% of manufacturers have adopted AI (up from 53% in 2024), but only 10% at scale
• 70% have completed or are reshoring, dramatically up from 33% in 2024, driven by labor shortages and cost pressures
• Top AI use cases: quality control (50%), IT operations (46%), supply chain management (45%)
• Key barriers to adoption: high implementation costs (40%), data security concerns (39%), integration challenges (38%)
• 60% of leaders worry about being too hesitant with AI adoption versus 40% concerned about being too aggressive

Nearly 72% of manufacturers have adopted AI, but only 10% have done so at scale. And, 65% of manufacturers have begun adopting generative AI (up from 48% in 2024), according to research released by Parsec Automation.

“Manufacturers are feeling pressure from reshoring imperatives, supply chain volatility, workforce shortages, cost pressure, and accelerating technological change,” says Suzanne Rudnitzki, CEO. “Operational excellence has shifted from a competitive differentiator to a prerequisite for survival. Business leaders are well aware of the challenges ahead of them, and they’ve taken great strides toward future readiness while overcoming obstacles like fragmented systems, inconsistent data strategies, and workforce constraints.”

Key takeaways:

• More leaders are worried about being too hesitant with AI (60%) than being too aggressive (40%).

• 70% of manufacturers have completed or are in the process of reshoring (dramatically up from 33% in 2024).

• 71% of manufacturers describe their supply chains as resilient (up from 50% in 2024).

• More than two-thirds (69%) of manufacturers operate with a hybrid mix of legacy and modern equipment, highlighting the industry’s unique straddling of several generations of technology.

• Just 37% have a unified, data-driven strategy in place, but 60% are in the implementation or planning phase (up from 40% in 2024).

• Top tools and capabilities include AI/ML-enabled decision support (54%), IIoT/Edge devices (50%), and predictive maintenance tools (50%).

• Nearly three-quarters (72%) of manufacturers have adopted AI (up from 53% in 2024) and 22% have implementations underway. Just 10% have adopted AI at scale across their network.

• Top AI use cases include quality control (50%), IT operations (46%), and supply chain management (45%).

• Barriers to wider adoption include high implementation costs (40%), data privacy and security concerns (39%), and difficulty integrating with existing systems (38%).

• When it comes to AI risks, more leaders are concerned about being too hesitant with adoption (60%) than being too aggressive (40%).

• Virtually all (100%) manufacturers have adopted generative AI or are in the planning/discovery phase, and 65% have begun adoption (up from 48% in 2024).

• More than two-thirds of manufacturers (70%) have completed or are in the process of reshoring; just 12% have no plans to reshore. This is a marked difference from 2024, when those numbers were 33% and 38%, respectively.

• Top reshoring challenges include increased operational complexity (46%), increased labor costs (44%), and supply chain logistics adjustments (44%).

• 70% of manufacturers were more focused on cost-cutting than supply chain resiliency during the past 12 months.

• 84% agree that, compared to other industries, manufacturing’s inaccurate perception as a labor-intense, low-skill industry makes it harder to recruit top talent.

• Manufacturers are split on whether AI could replace at least half of the roles in certain departments—53% say yes; 47% say no.

• The most challenging roles to fill include IT/tech specialists (60%), quality assurance staff (49%), and management roles (39%).

• Nearly half (45%) cite internal skill gaps as a major challenge when integrating new systems.

• Nearly three-quarters (71%) describe their supply chains as resilient, up from 50% in 2024.

• Two-thirds (66%) feel prepared to address current issues, up from 58% in 2024.

• Top supply chain challenges include complexity and lack of visibility (34%), raw material shortages and volatility (33%), and transportation disruptions (31%).

• Top mitigation strategies include implementing new technology (58%), strengthening supplier relationships (58%), and increasing inventory levels (53%).