8 HR Trends To Watch in Manufacturing
Part of a series | 2025 HR Trends Series
The manufacturing industry is transforming with key trends in talent and compliance for 2025. Talent trends include Generative artificial intelligence (AI), evolving employee experiences, skills training, and labor shifts, while compliance focuses on AI laws, pay transparency, wage requirements and personalization.
The manufacturing industry has weathered multiple storms over the past five years, from substantial labor shortages to supply chain challenges and soaring logistical costs. Now, the industry faces a new HR challenge: workforce transformation.
As the U.S. Chamber of Commerce notes, the labor gap has narrowed, and some manufacturing sectors even have a surplus of staff. According to the Deloitte 2025 Manufacturing Outlook, however, new challenges have emerged. These include decreasing labor participation rates as older staff retire, increasing compensation expectations and the demand for skillsets that combine manufacturing, digital and "soft" skills.
In this new reality, success requires HR teams to align hiring, workforce retention and compliance strategies with evolving employee expectations and emerging regulatory requirements. Here are eight talent and compliance trends to watch this year.
Top talent trends
Losing workers and replacing staff are costly for manufacturing firms. For 60 percent of companies surveyed by the UKG Workforce Institute, replacing a skilled frontline worker costs anywhere from $10,000 to $40,000. In addition, 56 percent of businesses said that the loss of employees had a moderate to severe impact on their bottom line.
Manufacturers now have a clear objective: retain workers wherever possible and find ways to bring in skilled staff. Four trends are informing this approach in 2025.
1) The rise of generative AI
Generative AI is changing how teams find skilled talent, recruit new staff and forecast labor demand. As reported by the ADP 2025 HR Trends Guide, 85 percent of workers believe that AI will impact their jobs in the next two to three years.
While first-generation AI tools could answer simple questions by finding and reporting information from structured data sets, Generative AI can create new content based on user queries. Manufacturing firms might ask Generative AI software to predict expected labor demand over the next six months. By drawing from multiple data sources, intelligent tools can offer both short- and long-term labor outlooks.
2) The evolution of employee experience
Employee experience plays a critical role in engagement and retention. According to a 2024 survey from Epicor, just 45 percent of manufacturing workers report high morale, and 43 percent are considering leaving their jobs in the next year.
This trend creates a growing need for improved employee experience. This may take the form of digital wellness platforms that help HR teams reduce workplace injuries, leading to lower absenteeism rates. Likewise, businesses could invest in self-service digital solutions that let employees easily access benefits, compensation and data.
3) The strength of skills training
Skills are now the primary indicator of staff success. According to a 2024 TestGorilla survey, 94 percent of organizations stated that skills are more predictive of on-the-job success than resumes alone.
This leads to a larger trend: the rise of upskilling and reskilling to both improve business operations and provide pathways for career advancement. New skills are also necessary to keep pace with evolving market conditions. Survey data from Deloitte found that 75 percent of manufacturing firms now prioritize simulation and simulation software skills, while 37 percent are looking to improve their information management. Solutions such as micro-credentialing frameworks or AI-driven learning platforms help companies adapt to changing market conditions and keep staff engaged.
4) The division of labor locations
Last on our list of talent trends is an ongoing shift in workforce location. For example, while production line processes must still be carried out on-site, many corporate and research and development (R&D) functions have shifted to hybrid or entirely remote.
As reported by Manufacturing Dive, some of the most important on-site roles include repair and maintenance workers, especially generalists with multiple technology skills. Effective communication is the cornerstone of this talent trend. Regular and reliable connection is essential to ensure that on-site processes align with long-term business strategies.
Critical compliance considerations
Compliance expectations are evolving in tandem with talent requirements. Here are four compliance considerations for manufacturing companies in 2025.
5) The emergence of AI laws
Along with improved labor forecasting, Generative AI also streamlines the process of resume review and candidate selection, in turn saving HR teams both time and effort.
Much like humans, however, these tools raise a concern: bias. This bias isn't intentional; instead, it's the result of the data used to train AI models and the output requirements imposed by users. Legislators are creating new AI laws to help limit the risk of biased recruiting, compensation or termination decisions.
As noted by HR Dive, these laws vary by state. In New York, employers must regularly conduct audits on automated decision tools and post the results on their website. Tools that have not been audited in more than a year cannot be used. Similarly, in Colorado, employers must create AI risk management policies to reduce the risk of bias and carry out annual system audits.
6) The priority of pay transparency
Pay gaps remain a problem in manufacturing. For example, the Bureau of Labor Statistics reports that non-union members had weekly earnings that were 85 percent of their union counterparts. Skilled trade and corporate roles also exhibit significant differentials. While C-suite members may have higher salaries, in-demand tradespeople may earn enough overtime to outpace executives.
Addressing pay gaps requires transparency. Under the National Labor Relations Act (NLRA), employees have the right to communicate about their wages and making pay data transparent helps create a culture of trust.
7) The moving target of wage-and-hour requirements
Wage-and-hour reporting is a complex task for manufacturing firms — and can create compliance risks if not properly conducted. Consider a recent case investigated by the Department of Labor's Wage and Hour division, which fined a Minnesota food manufacturer over $140,000 for unsafe working conditions and labor violations. For manufacturing companies, common issues include calculating overtime pay and shift differentials and ensuring that contractors are properly classified.
To address wage-and-hour concerns, businesses are best served by AI-driven payroll tools. As noted by Tonya James, vice president of product management at ADP, "With Generative AI, you can be notified proactively about things like compliance changes that may have an impact on your payroll, or be alerted immediately about data errors and actually resolve them at that point in time."
8) The promise of personalization
According to the ADP 2025 HR Trends Guide, employees who feel cared for by their employer are 92 percent more likely to feel engaged at work and 65 percent more likely to remain loyal. One way to achieve this care is through personalization. This may include using HR platforms that provide customized dashboards and data views and let teams offer personalized benefits tailored to employee needs.
The challenge? Data privacy. If companies can't keep employee data safe — or if they misuse this data — the result may be decreased engagement and increased staff churn. Consider data from PWC's 2024 Trust Survey, which found that while 86 percent of businesses think that employee trust is high, just 67 percent of employees highly trust their employer. To balance personalization and privacy, manufacturers need a combination of policies and platforms. Policies should lay out what data is collected, how it is used and what steps are taken to keep it secure. Platforms should provide staff access to their personal data, along with the ability to opt out.
Taking on transformation
2025 is a year of change for the manufacturing industry. Needed skills are changing, payroll processes are evolving and compliance regulations are expanding to cover new technologies such as Generative AI.
Taking on transformation requires anticipating talent and compliance trends while actively engaging staff, improving transparency and leveraging new technology.
Learn more: Download the 2025 HR trends guide
