2025’s top challenges for Manufacturers

Demand within Manufacturing has been plunging in the recent years. It was barely able to recover from the fluctuations in demand and supply during the pandemic before a new wave of inflation hit the industry again.

The US has played a dual role in recent economic shifts—both as a key instigator and one of the most affected markets. For the most part, the US manufacturing sector showed resilience in the face of post-pandemic fluctuations, buoyed by fresh investments in clean technology and semiconductor production. However, since the introduction of the Liberation Day tariffs, both global and domestic players in the US manufacturing space now face heightened risks of supply chain disruptions.

Across the pond, Europe’s manufacturing continues to face hurdles due to soaringhigh energy prices, stringent environmental regulations, and rising labour costs. The outlook for the region therefore remains cautious.

While Asian emerging markets, particularly India and South-Eastern markets, may experience a robust growth thanks to investments in semiconductor manufacturing and shifts in global supply chains.

However, with the tariff flip flops disrupting further the global trade flows, global suppliers and manufacturers are left dealing with the aftermath of increased costs and supply chain reconfigurations, irrespective of where they are in the world.

There is a silver lining to everything. While manufacturing businesses have historically faced higher rates of late payments compared to other industries, 2025 can also be a turning point. Technological advancements, geopolitical shifts, and evolving business needs are driving a significant transformation across the sector.

Indeed, the industry is now adopting real-time payments, expanding embedded finance, and applying a diversification of its cross-border payment systems.

In its Country and Sector Risk Barometer 2025 study, Coface, a global credit insurance company, highlights several global economic trends that can impact payment practices in the manufacturing sector. Coface forecasts a slight improvement in world growth for 2025 to 2.7%, up from 2.6% in the previous estimate, but also the vulnerabilities of emerging economies that face challenges such as rapid dollar appreciation and massive capital outflows. In addition, Coface emphasises the fact certain sectors, including manufacturing, are under pressure due to factors like increased competition, trade tensions, and changing demand patterns.

While it is common for manufacturers to use multiple tier 1 (direct) and tier 2 (indirect) suppliers from all over the world to deliver their end goods, 2025’s increasingly volatile and digitalised landscape drives manufacturer to track risk and performance across the full supplier ecosystem with the aim to prevent disruptive events, regulatory pressures as well as finance and payment risks.

In the last few decades, China was labelled the 'Factory of the World', but the pandemic reshaped the industry, and many organisations had to diversify their value chains to include suppliers from other countries.

In 2025, the health and visibility of Tier 2 and above suppliers should be seen as critical as Tier 1, especially for industries like automotive, electronics, and pharmaceuticals. To gain or maintain a decisive competitive edge, manufacturers will need to understand and manage risks across international multi-tiered networks.

Such diverse and flexible supply chains will provide companies with improved agility to prevent disruption but also an increased level of risk that will impact their due diligence processes.