Q&A with Jerry Murphy on Manufacturers’ Challenges and 2025 Outlook

Last November, Sikich conducted a year-end Manufacturing Pulse survey to close out 2024. We asked executives to input on the challenges they faced in 2024, tried-and-true methods for preventing fraud and more. Sikich’s manufacturing services leader, Jerry Murphy, CPA, CMA, CGMA, weighed in on the findings and provided recommendations for executives as they plan for industry challenges for the better part of 2025.

Murphy has over 35 years of experience providing assurance and consulting services to manufacturing and distribution businesses. View the full results of the 2024 Volume 3 Pulse here.

With a shift in power in the White House, how likely are we to see policy changes or government actions shaping the manufacturing industry in the next year?

Any time a new party takes majority control in the White House and Congress we can expect policies to change, impacting all industries. Shifts related to trade, taxes, labor and regulations will particularly play a role in the manufacturing industry. Trade policies, including potential tariff adjustments, could affect supply chains, making domestic sourcing more attractive while increasing costs for imported goods. Manufacturers should closely monitor policies as sudden changes could disrupt pricing strategies and global competitiveness.

At the start of 2024, executives predicted labor shortages to be the biggest challenge for the year, but by year-end, inflation concerns overtook it. How have manufacturers adapted to these evolving challenges?

Manufacturing companies have had to be agile with labor shortages and rising inflation affecting their businesses. Many have looked to optimize automation to reduce dependency on labor and are working to upskill existing employees to mitigate workforce gaps. While manufacturers have addressed labor challenges to the best of their abilities, inflation continued to prove itself more difficult to manage. One tactic leaders have taken is to pass rising costs onto customers and find other ways to provide value to maintain customer loyalty.

At the time of the survey, manufacturing executives predicted their greatest challenge in 2025 would be increased competition, according to Sikich’s Pulse. What changes in the market drive this increased competition, and how can manufacturing businesses position themselves to stay ahead?

This increase is a result of evolving consumer preferences, the rise of new market entrants and technological advancements. To stay competitive, manufacturers need to continue to monitor changes in directives, prioritize innovation, diversify their product offerings and invest in the customer experience. Building stronger partnerships within supply chains and leveraging their business’ data to anticipate market trends will help leaders gain an edge this year.

The rising cost of materials doubled as the top concern over the past year. What strategies can businesses implement to mitigate the impact of fluctuating material costs?

Strategic manufacturers will adopt a multi-pronged approach to deal with rising material costs: manufacturing leaders must diversify suppliers and develop long-term contracts with key suppliers to reduce risk and costs. But, they also need to explore alternative materials where feasible. The other part of this is leveraging data analytics to better forecast market changes and implementing lean inventory management strategies.

Expanding into new markets and new product development are key growth areas for executives in 2025. What advice would you give to manufacturers looking to grow into new markets?

Thorough market research is essential to understand customer needs and regulatory environments before expanding into new markets. Building local partnerships can accelerate market entry and reduce risks. It’s also important to adapt product offerings to meet regional preferences and invest in technology to support your growth.

In November, 41% of executives planned to increase headcount over the subsequent six months. What skillsets do you see being most in-demand for manufacturers?

I predict there will be demand for roles in automation technology, data analytics and supply chain management. Technical skills in robotics and advanced manufacturing processes are increasingly valuable, along with expertise in cybersecurity to safeguard digital infrastructures. With persistent labor shortages, businesses should explore training their existing labor force for many of these roles.

To read the latest Pulse results and our findings, please click here. You can also contact our team to get in touch with manufacturing experts that can provide value to your operations.