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2027

ADVANCED MANUFACTURING OUTLOOK REPORT

Technology under pressure: How manufacturers are investing and adapting in uncertain times Photo: © Adobe Firefly

Published by:

SPONSORS

Scott McNeil-Smith Vice President, Manufacturing Sector Performance, EMC

MODERATOR

RESEARCH CONDUCTED BY Gerald Bramm President Bramm Research Inc.

Kirstyn Brown Editor PLANT

TABLE OF CONTENTS

Operational Priorities

Sponsor Messages

Technology Investment

Demographics: Who took our survey?

Data Management & Governance

Executive summary

Technology Adoption

Digital Transformation

Tariffs & Trade

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

MESSAGE FROM OUR SPONSORS

FROM RESILIENCE TO CAPABILITY: MANUFACTURING WHAT COMES NEXT By Scott McNeil-Smith

ver the past several years, Canadian manufacturers have become very good at responding to disruption. Supply shortages, tariffs, inflation, labour constraints, rising energy and operating costs, geopolitical events and rapidly changing technology have tested almost every part of Canada’s manufacturing sector. The 2027 Advanced Manufacturing Outlook Report suggests the challenge is evolving again. Reducing operating costs has moved to the top of manufacturers’ priorities. Investment decisions are being scrutinized more closely. More uncertainty. More competition. More urgency to build capability. Tariff and economic uncertainty are affecting technology spending. And while manufacturers continue to invest in automation, digitalization and AI, only a relatively small percentage have reached the highest levels of advanced manufacturing maturity. Delaying investment now could have implications for future productivity and competitiveness. That does not suggest Canadian manufacturing is retreating. It suggests manufacturers are becoming increasingly deliberate about where they invest and what creates measurable value. The next phase of advanced manufacturing will not be defined by who adopts the most technology. It will be defined by who builds the strongest capability around it. Technology remains essential, but technology alone does not create productivity. Manufacturers need the people who can operate, integrate and improve it; processes that translate information into better decisions; reliable supply chains and market opportunities; and the plant, equipment, energy and digital infrastructure required to scale. This is why I believe the conversation is shifting from resilience toward capability and readiness. Canada is entering a period of significant opportunity in defence, infrastructure, critical minerals, energy and advanced technology. At the same time, manufacturers are being challenged to diversify markets, identify domestic suppliers, strengthen productivity and compete against increasingly sophisticated global competitors.

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

For Canadian manufacturers, sovereignty does not mean making everything ourselves. It means understanding where we have strategic capability, where critical gaps exist, and where Canadian manufacturers can compete, supply and grow. Resilience helps a manufacturer withstand disruption. Capability determines what they can do with the opportunities that follow. At EMC, much of our work is increasingly focused on connecting these pieces. Across the sector, that means strengthening workforce capabilities, improving productivity and operational excellence, building more resilient domestic supply chains, opening new markets and ensuring manufacturers have the intelligence, energy strategies and technology readiness required to compete. These are increasingly interconnected challenges, reinforcing the need to build capability across People, Process and Plant/Technology rather than addressing each in isolation. There is also an important lesson in the Outlook results, for manufacturers that consider themselves somewhere in the middle of their advanced manufacturing journey – and that represents much of the sector. Being ‘advanced’ is a continuous process of improving productivity, developing people, integrating information, strengthening supply chains and investing where those investments produce competitive advantage. It is not just about a technology purchase. The opportunity for manufacturers in 2027 is not simply to accelerate technology adoption. It is to accelerate the productive application of technology. Canada has tremendous manufacturing expertise, innovation and entrepreneurial capacity. Manufacturers who can connect advanced manufacturing and technology with workforce capability, operational excellence, domestic and international market opportunities, and stronger supply networks will be better positioned to navigate uncertainty and capitalize on the opportunities that come next. And increasingly, that is the measure that matters. Scott McNeil-Smith Vice President, Manufacturing Sector Performance for Excellence in Manufacturing Consortium of Canada (EMC)

MESSAGE FROM OUR SPONSORS

HOW CAN MANUFACTURERS TURN AI ADOPTION INTO BUSINESS VALUE? By Vishen Maharaj

rtificial intelligence is finding its way into more areas of business. Whether operations are using AI to analyze production and inventory data, automate documentation, improve scheduling, support quality control or take repetitive administrative work off employees’ plates. There’s no shortage of ways manufacturers can put AI to work, so where do you put your focus? MNP Digital Report: The Business of AI 2026 offers some insight. Based on a national survey of 250 senior decision makers and influencers, the research shows that nearly half of organizations, 48 per cent, describe their AI adoption as operational. And 91 per cent say they’re satisfied with their progress. Yet only 17 per cent characterize their AI use as systemic and just four percent describe it as transformational. That gap is worth paying attention to. Getting more from AI hinges on choosing where it can make the greatest difference, building the capabilities to support it and knowing what success look like for your business.

Where can AI make the greatest difference? Productivity is a natural place to start. Sixty-six per cent of organizations currently use AI for operational enhancements and productivity improvements, while 61 per cent plan to continue investing in these applications. Manufacturers have plenty of opportunities to put those capabilities to work. AI could help automate reports and work instructions, analyze production or quality data, streamline scheduling and maintenance or reduce the manual work involved in administrative processes. The key is to start with a business problem rather than the technology. Where are employees spending too much time on repetitive work? Where are manual processes slowing production or decision-making? Where could better information improve quality, cost, throughput or customer service? Answering those questions can help narrow a long list of possible AI applications into use cases that solve an operational need.

And those concerns are understandable. Bringing AI into a business can change how people work, how information is used and how decisions are made. Giving employees the right training, making sure the data is reliable and setting clear expectations around how AI should be used can make that transition easier.

How should manufacturers measure the return? The research suggests businesses are already seeing results. Ninety-one per cent report realizing tangible returns from their AI investments. One common misstep is approaching AI investment like a traditional technology rollout, where you fund a platform and measure the overall return. AI does not behave that way, therefore it needs a different approach. But the size of those returns doesn’t necessarily match that level of confidence. Fifty-nine per cent characterize them as modest, while only 16 perc ent report significant gains. For manufacturers, measuring success solely through time saved may leave part of the picture out. When examined pragmatically, AI creates value in four distinct but connected ways: Productivity; Growth; Risk and trust (Governanc) and Insights. Depending on the task, AI could also be measured against improvements in throughput, quality, downtime, cost, risk, customer experience or revenue. Defining those measures before investing makes it easier to determine whether an AI initiative is simply making an existing task faster or contributing to a larger business objective.

What comes next?

What could prevent AI from scaling?

Interest in AI isn’t slowing. Nearly 75 per cent of organizations surveyed expect to increase their AI investment, whether through net new budget or reprioritizing existing budgets. As investment grows, so does the importance of deciding where those dollars can make the greatest difference. Understanding how AI can move your business forward starts with identifying where it can solve a meaningful problem, making sure your organization is ready to support it and measuring whether it delivers the intended results. MNP Digital Report: The Business of AI 2026 examines AI adoption and maturity, use cases, barriers and challenges and return on investment across Canada’s mid-market. Download the full report to see where businesses stand on AI and what the findings could mean for your next investment.

Skills and knowledge rank as the number one barrier to greater AI adoption. Cyber security, data concerns and integration challenges are cited by 40 per cent of businesses, while 32 per cent point to employee resistance or fear of job displacement.

Vishen Maharaj Director, AI Engineering 416.626.6000 | vishen.maharaj@mnp.ca

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

MESSAGE FROM OUR SPONSORS

ERP IN THE AI ERA: WHY A “SYSTEM OF RECORD” MATTERS MORE THAN EVER By John Preiditsch, President and CEO, Six S Partners

or nearly 40 years, I have helped manufacturers use enterprise resource planning systems to improve performance, manage growth and gain control of their operations. Technologies and terminology have changed dramatically, but the fundamentals of manufacturing have not. Manufacturers still need to know what to make, what materials to buy, when work should be scheduled, what products cost and whether customer commitments can be met profitably. ERP connects these decisions across sales, engineering, supply chain, production and finance. It replaces departmental islands of information with structured processes and a trusted, enterprise-wide system of record. Artificial intelligence is causing some people to question whether ERP remains relevant. I believe the opposite is true. In the AI era, ERP matters more than ever. The 2027 Advanced Manufacturing Outlook Report helps explain why. Seventy-three per cent of respondents remain at the Developing or Established stages of digital maturity, while only 10 per cent qualify as Advanced+. The Advanced+ manufacturers are much more likely to use advanced analytics, at 67 per cent versus 27 per cent overall and AI or machine learning, at 47 per cent versus 25 per cent. The difference is not simply better technology. It is the operational foundation required to use technology effectively. The survey found that manual data collection increased from 33 per cent to 47 per cent. The number of respondents saying they do not monetize or leverage their data also increased from 8 per cent to 20 per cent. These findings should concern any organization pursuing AI without first addressing its processes and data. AI cannot create reliable operational truth from inconsistent transactions, disconnected spreadsheets or undocumented workarounds. ERP provides the context AI needs. A properly implemented system connects customers, orders, parts, bills of material, routings, jobs, suppliers, inventory movements,

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

labour, costs and financial results. This allows AI to analyze businesses holistically. For example, it can assess how a supplier delay may affect materials, production schedules, customer delivery, cash flow and margin because those relationships already exist within the operating data model. Modern ERP platforms are also embedding AI directly into workflows. They are evolving from systems that record what happened into systems that can identify risks, predict outcomes, recommend actions and help users execute those actions with appropriate governance. AI is not replacing ERP. It extends the value of the structured data, industry logic and repeatable processes ERP has developed over decades. Software alone, however, does not create these benefits. The key question is not whether a proven ERP system can work, but whether the organization’s culture can make it work. An ERP project should be treated as a business-transformation and continuous-improvement platform, not an IT installation. With manufacturers facing rising costs, supply-chain uncertainty, labour constraints and higher customer expectations, operational control is essential. The survey reports that reducing operating costs is now the leading priority, selected by 45 per cent of respondents. Yet costcutting without visibility is a blunt instrument. The true ROI of ERP is established from process improvements by helping leaders distinguish waste from capability, understand trade-offs and direct limited resources toward higher-value opportunities. The manufacturers that gain the most from AI will not necessarily be the first adopters. They will be those with disciplined processes, trusted data and a culture of continuous improvement. ERP endures. John Preiditsch is a 38-year ERP veteran who has owned an ERP software company and overseen more than 1,000 implementations. For over 20 years, he has led Six S Partners, an Epicor Platinum Elite Partner serving manufacturers across Canada and the United States. For more information, visit www.sixspartners.com.

DEMOGRAPHICS

WHO TOOK OUR SURVEY?

Photo: © Adobe Firefly

his year’s Advanced Manufacturing Outlook Survey drew responses from 156 manufacturing executives and leaders across Canada. The majority of respondents are based in Ontario (54%). Western Canada accounted for close to a third of participants (31%), while Quebec represented 10% and Atlantic Canada 5%. Most companies surveyed are small to mid-sized, with 48% employing fewer than 50 people and 26% reporting between 50 and 249 employees. Larger organizations are also present in the sample, including 12% with 250–499 employees, 9% with 500–999, 4% with 1,000–4,999 and 1% with 5,000 or more. Domestic revenues under $50 million account for 79% of respondents this year. The average company size is 375 employees, and the average domestic revenue is $65.4 million, both down from 2026.

Respondent profile Owner/Partner is the most common title among respondents (24%),

followed by Director (10%) and Plant Manager and Production/ Operations Manager (8% each). Manufacturers from a broad range of sectors took part, with the largest groups representing miscellaneous manufacturing (25%), fabricated metal product (23%), machinery (14%), aerospace product and parts (12%) and electrical equipment, appliance and component manufacturers (10%).

A note on this year’s sample The average company surveyed this year was smaller than in previous years, both in employee count and in revenue. As Scott McNeil-Smith, Vice President, Manufacturing Sector Performance at EMC, noted during this year’s roundtable, some of the year-over-year swings elsewhere in this report may partly reflect a different mix of respondents answering the survey this year, rather than a uniform shift in behaviour across the sector. This is worth keeping in mind when reading the report.

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

DEMOGRAPHICS LOCATION INDUSTRY SECTORS

NUMBER OF EMPLOYEES

54%

12%

9% Alberta

12%

1% Quebec

10%

79%

Environmental

Printing and related support activities

5% 5% 4% 4% 3% 3% 3% 3% 3%

Life Sciences (such as Biopharma/Pharmaceutical, medical devices)

Motor vehicle

2% 2% 1% 1% 1%

Plastics and rubber products

Wood product

Paper manufacturing

Manitoba

Beverage and tobacco product Primary metal Furniture and related product Petroleum and coal product

Saskatchewan

TITLE 24% 10%

Plant Manager

Production/Operations Manager

CEO/President

Administrative Management

Vice-president

Design Engineering

Maintenance Manager

Plant Engineering

Technician/Technologist

Purchasing/Supply Manager

Quality Assurance Manager

Safety manager

Logistics Manager

Materials Manager

Other

14%

Nova Scotia

Ship and boat building Clothing manufacturing Textile product mills

Newfoundland & Labrador

Non-metallic mineral product

TOTAL REVENUE (domestic operations only) New Brunswick

PEI

Yukon / NWT / Nunavut

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

Less than $1M

14%

$1M to just less than $5M

21%

$5M to just less than $10M

14%

$10M to just less than $30M

16%

$30M to just less than $50M

14%

$50M to just less than $100M

$100M to just less than $250M

$250M to just less than $500M

$500M to just less than $1B

Flags: © Adobe Stock

Director

Transportation equipment

Food manufacturing

Computer and electronic product

of respondents report domestic revenue under $50 million

Owner/Partner

Chemical

Electrical equipment, appliance, and component

Motor vehicle parts

1,000 – 4,999

Fabricated metal product

Aerospace product and parts

British Columbia

25% 23% 14% 12% 10% 9% 7% 7% 5%

Miscellaneous manufacturing

Machinery

12%

500 – 999

5,000 or more

Ontario

26%

50 – 249 250 – 499

Industry

48%

Less than 50

EXECUTIVE SUMMARY By Kirstyn Brown

Photo: © Adobe Firefly

anadian manufacturers spent 2026 operating amidst an escalating trade war with the United States. What started in 2025 when President Trump took office grew to a fever pitch in August, with the U.S. imposing 50% duties on a broad range of Canadian goods. Canada responded with its own tieredcounter tariffs on roughly $27.6 billion of U.S. imports on Sept. 8. While this year’s survey was fielded from May to July, before the worst of that escalation, the pressure had been building for months, impacting the mindset of manufacturers and their executive decision making. Most manufacturers who responded said they are managing the pressure by raising prices, diversifying suppliers, cutting costs where they can and investing in technology to streamline their business. Cost reduction is this year’s top operational priority, while investment intentions for several specific technologies eased. Manufacturers have not stopped investing in technology, but they appear to be more selective in where they allocate capital. The 2027 Advanced Manufacturing Outlook Survey measured advanced manufacturing engagement, including IIoT, artificial intelligence, automation and data governance among 156 Canadian manufacturing executives and leaders. For the third consecutive year, the survey was conducted by Bramm Research Inc. in Toronto on behalf of Canadian Manufacturing and PLANT, in partnership with our sponsors: EMC, MNP, Six S Partners and Syspro. The survey defines advanced manufacturing as the integration of machine learning, interconnectivity, automation and real-time data analysis, encompassing the Industrial Internet of Things (IIoT), advanced computing, artificial intelligence and cloud technologies.

Digital maturity Only 15 of the 156 respondents, about 10%, classify their company as Advanced or Leading in its level of digital transformation. Another 73% describe themselves as Developing or Established, a percentage that

has barely changed since last year. Advanced+ firms report a data governance policy in place at nearly double that of overall respondents (77% versus 42%), and their use of machine-driven automation and AI is far higher across nearly every measure in the survey.

Operational priorities and cost reduction Reducing operating costs is the top operational priority this year, cited by 45% of respondents overall and 53% of Advanced+ firms, ahead of production throughput and labour and skills gaps. The lack of skilled labour (49%) and a limited capital budget (37%) remain the biggest barriers to addressing those priorities. Manufacturers anticipate real consequenes if their priorities go unaddressed, with 63% saying they expect lost business opportunities, 56% expect reduced competitiveness and 54% expect higher operating costs.

Technology investment Fewer respondents plan to invest in most individual technology categories this year. Planned investment in artificial intelligence fell 13 points, cloud computing and 3D printing each fell 19 points and virtual reality fell 15 points. Robotics and automation held up better than the rest, down 8 points. Yet among manufacturers who do plan to spend, the amount they intend to increased. The average intended three-year spend, among those planning to invest, rose to $2.59 million this year from $1.57 million in 2026. Advanced+ firms plan to spend $3.31 million on average.

Data and governance Manual data collection rose to 47% of respondents this year, up from 33% in 2026, even as formal data governance policy adoption fell to 42%, down from 61%. Notably, 22% of respondents said they did not know whether their company has a governance policy at all, compared to 0% last year. The share of manufacturers who say they do not

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

EXECUTIVE SUMMARY monetize or leverage their data at all also rose, to 20% from 8%. Advanced+ firms remain well ahead on governance and data use, which several industry experts pointed to as the clearest evidence that a strong data foundation, not access to any particular technology, is what separates the leaders from everyone else. With regards to cybersecurity, 15% of respondents experienced a cybersecurity incident in the past 12 months. Most manufacturers have taken at least one protective measure, led by staff training (72%), security infrastructure (70%) and risk assessments (57%). Incident response plans remain less common overall, at 34%, though adoption is much higher among Advanced+ firms (57%). Cybersecurity also ranks among the top three technologies manufacturers intend to invest in over the next three years, alongside AI and robotics.

Barriers to digital transformation Resistance to change is this year’s leading implementation challenge, cited by 49% of respondents, up from 40% last year. Legacy system integration remains a significant issue at 42%. Concern about a lack of skills held steady at 36%, but manufacturers reporting that resources are simply hard to find rose to 23% from 13%, while funding challenges decreased to 34% from 52%.

Tariffs and supply chain Use of supply chain risk mitigation technology fell sharply this year, to 41% of respondents from 67% in 2026, even as tariff pressure was building. Seventeen percent of respondents, up from 11%, say recent tariffs have significantly reduced their technology investment, a number that is even higher among Advanced+ firms (33%). Forty-six percent report no change in their technology investment decisions because of tariffs. The most common responses to tariff pressure are diversifying suppliers (47%), raising prices (44%) and cutting expenses (38%). It’s worth noting that some roundtable experts who analysed the results cautioned that part of this year’s swing may reflect a different mix of respondents rather than a retreat from supply chain technology across the sector, a point worth keeping in mind alongside the numbers. Based on the survey results, roundtable experts felt that most Canadian manufacturers already understand why advanced technology matters, and most already have some of it in place. The companies pulling ahead in digital maturity distinguish themselves through stronger governance, data practices and automation adoption. Kirstyn Brown is the editor for PLANT and the 2027 Advanced manufacturing Outlook Report

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2027 ADVANCED MANUFACTURING OUTLOOK REPORT

2026-09-16 1:50 PM

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DIGITAL TRANSFORMATION

DIGITAL MATURITY:

CAN WE CLOSE THE GAP?

nly 15 of the 156 respondents classify their company as Advanced or Leading in their digital transformation, about 10%, up from 5% a year ago. For those in the middle group, there was almost no change: 73% of respondents remain in the Developing or Established stages.

What sets Advanced+ firms apart

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

“They have the infrastructure. They’ve done the experiments,” he said. “Now they’re building on that momentum where they’re seeing benefits.” Casey Sim, Senior Manager of Engineering & Quality at KUMI Canada, agreed the divide isn’t permanent. “Once companies start to saturate and get more value of what’s been put in there, all those gaps that people need to close become obvious,” he said. “Every company has the opportunity to walk through this door; it just takes going through the proper steps to be able to get there.”

Small companies have big company problems and they’re slowly warming up to becoming more mature about it. John Preiditsch, President and CEO of Six S Partners

Photo: © tarik / Adobe Stock

Advanced+ firms report a formal data governance policy in place at nearly double the overall rate, 77% versus 42%. They use machinedriven automation at 53%, compared with 28% overall, and report some form of AI or machine learning use at 87% versus 68% overall. Their average three-year technology budget is higher too, at $3.31 million against $2.59 million overall. When asked whether it’s possible to close that gap, the roundtable experts were optimistic. “I think the gap is closable,” said Stewart Cramer, Chief Program Officer at NGen. “If you start with good process and good data, you can really rapidly make headway and close a gap like that. If you start with poorly controlled processes or suspect data, you can’t move forward.” John Preiditsch, President and CEO of Six S Partners, said: “It’s less about access to technology and really more about execution. Do companies have consistent processes? Do they trust the data? Is leadership on board with some of these business outcomes? It’s about turning this continuous improvement approach into something that’s repeatable and consistent, which would give them confidence. “ But smaller companies are catching up gradually. “Small companies have big company problems and they’re slowly warming up to becoming more mature about it, said Preiditsch. Vishen Maharaj, Director of AI & Machine Learning at MNP Digital, said Advanced+ firms are ahead because the groundwork is already in place.

I think the gap is closable. If you start with good process and good data, you can rapidly make headway and close a gap like that. If you start with poorly controlled processes or suspect data, you can’t move forward. Stewart Cramer, Chief Program Officer, Ngen

33%

DIGITAL TRANSFORMATION STAGE 40% 40% 33% 34%

18%

DATA GOVERNANCE BY MATURITY LEVEL

22%

29%

Developing 9% 4%

Initial

of Advanced+ firms report systems that are primarily machine-driven with minimal human intervention

Developing

Established 2027

Advanced

Leading

2026

ADVANCED+ vs. OVERALL Advanced+

Overall

Data governance policy in place

77%

42%

Machine-driven automation

53%

28%

AI/ML use (any):

87%

68%

$3.31M

$2.59M

Avg. 3-year tech budget

50%

Established 1%

77%

Advanced+

Where do you see the greatest need for improved cross-functional collaboration to successfully implement new technologies and process improvements? Operations Engineering

Supply Chain/Procurement: 50%

Production (NPI, process changes): 48%

Demand Planning Sales/Commercial Customer Service

Capacity/Production Planning: 40% Operations (S&OP): 39%

Operations: 39%

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

OPERATIONAL PRIORITIES

COST REDUCTION:

CUTTING SMARTER, NOT DEEPER

2026 ADVANCED MANUFACTURING REPORT

63% said they expect lost business opportunities, 56% expect reduced competitiveness and 54% expect higher operating costs.

Cutting costs vs. reducing them In the roundtable, experts raised the point that cost cutting and cost reduction aren’t the same thing, and confusing the two can do lasting damage. For Casey Sim, Senior Manager, Engineering & Quality at KUMI Canada, it comes down to how deliberately a company cuts. “Cost cutting is nuanced. What exactly is cost cutting? Are we shooting indiscriminately, or are we performing surgery?” said Sim. “Companies that understand their operation, that have a bit more intelligence to look a little deeper and see where the costs are, are generally the ones able to take the more nuanced approach.” Scott McNeil-Smith, Vice President, Manufacturing Sector Performance at EMC, commented that while straight cuts might look good on a financial statement in the short term, they come at a cost of their own. “If you just look at cutting your costs or delaying that investment, that would show up as having a bottom-line impact on the financial statements, but it weakens future competitiveness.” For Francis de los Santos, Business Consultant, Advanced Manufacturing at Invest Mississauga, the real shift is one of mindset rather than spending. “There’s a difference between cutting costs and improving

Photo: © graja / Adobe Stock

ariff pressure and rising costs have put many Canadian manufacturers on the defensive this year, and it shows in their priorities. Unsurprisingly, reducing operating costs is the top operational priority — a new section added to the survey — cited by 45% of respondents overall and 53% of Advanced+ firms, ahead of improving production throughput (38%) and addressing labour and skills gaps (36%). Advanced+ firms diverge on secondary priorities, though. Reducing defects and waste ranks far higher for them (33% vs. 19% overall), as does adding new product lines (27% vs. 17% overall) — a sign that the most digitally mature manufacturers are looking beyond costs and toward growth and quality gains. When it comes to pursuing these priorities, manufacturers across every digital maturity level are running into the same obstacles: 49% point to a lack of skilled labour, 37% to a limited capital budget and 33% to competing priorities. However, a tight capital budget doesn’t automatically signal that a company has stopped investing, said Vishen Maharaj, Director of AI & Machine Learning at MNP Digital. The spending may simply be going somewhere other than new equipment. “It may mean they’re investing in technology through people and process rather than through buying capital assets,” he said. If these priorities are not met, respondents expect real consequences:

BARRIERS TO SUCCESS 49%

Lack of skilled labour

37%

Limited capital budget

33%

Competing priorities

28%

Uncertain ROI

26%

Lack of internal expertise

26%

Supply chain constraints

24%

Operational disruption concerns

17%

Regulatory pressures

10%

Integration challenges

14%

Other

33 vs.19 %

efficiency,” he said. “Sometimes the best way to reduce costs is to reinvest in the business through better processes, automation, data.” He framed it as a question manufacturers need to start asking differently: not how do we find more people, but “how do we get more productivity and consistency from the people, the equipment, the systems and the processes we already have?”

Advanced+ firms vs. all respondents who rank reducing defects and waste among their top priorities

TOP OPERATIONAL PRIORITIES 45%

Reducing operating costs

38%

Improving production throughput

There’s a difference between cutting

36%

Addressing labour/skills gaps

costs and improving efficiency.

30%

Improving equipment efficiency

Sometimes the best way to reduce costs

30%

Entering new markets

is to reinvest in the business through

26%

Improving supply chain stability

better processes, automation, data.

19%

Reducing defects/waste

17%

Adding new product lines

13%

Reducing unplanned downtime

10%

Other

– Francis de los Santos, Business Consultant, Advanced Manufacturing at Invest Mississauga

2026 ADVANCED MANUFACTURING REPORT

TECHNOLOGY INVESTMENT

INVESTING WHERE IT COUNTS: MANUFACTURERS ARE

FOCUSING THEIR TECH SPENDING ON FEWER PRIORITIES

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

Fewer categories, bigger bets Stewart Cramer, Chief Program Officer at NGen, cautioned against reading those declines as a sign manufacturers are pulling back on technology spending. “Almost half of companies are not reducing,” he said. “More than half of companies are either holding the line or increasing their investment, which is really encouraging. A lot of companies are still going full on and continuing the trends that we saw in prior years.” Looking at what manufacturers reported planning to spend, the data agrees with him: 73% of respondents intend to spend between $100,000 and just under $5 million on technology over the next three years. The share of respondents planning to spend $1 million to $4.99 million grew to 21% from 16% in 2026. The average intended spend, among those planning to invest at all, rose to $2.59 million this year from $1.57 million in 2026. Taken together, the results suggest manufacturers may be concentrating their spending into a smaller number of priorities.

Photo: © Vlad Darii / Adobe Stock

his year’s survey found that most manufacturers currently lean on a familiar set of tools to run their operations: ERP or MRP systems remain the most common (63%), followed by industrial software (54%) and cloud systems (45%). Unsurprisingly, Advanced+ firms lean more heavily on sensors and data capture (60% vs. 38% overall), advanced analytics (67% vs. 27%) and AI or machine learning (47% vs. 25%). Looking ahead, though, fewer respondents plan to invest in most individual technology categories this year than they did in 2026. Artificial intelligence remains the top technology respondents plan to invest in over the next three years, but share of respondents planning to invest in AI over the next three years dropped 13 points from last year, to 51% from 64%. Robotics and automation declined less sharply, down 8 points to 40% (53% among Advanced+ firms), while cybersecurity rounds out the top three at 38%. The steepest declines came in 3D printing (-19 points), cloud computing (-19 points) and virtual reality (-15 points).

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TECHNOLOGY INVESTMENT Part of what’s changing, Cramer said, is how manufacturers think about AI specifically, shifting from a line item to something embedded everywhere. “For a while, people were spending on AI — everything was an AI project,” he said. “It could be an ERP project that happens to have onboard AI now. I think AI, in terms of an investment, will change as it becomes much more of a method rather than a thing.” That shift may also explain why uncertainty about ROI is highest among Advanced+ firms, at 40% compared with 28% overall. But Cramer noted that uncertainty doesn’t necessarily reflect skepticism. In many cases, the most digitally advanced manufacturers are pursuing broader, more integrated initiatives where value is harder to isolate and measure. “When you go out and buy a new machine tool, it’s easy to calculate an ROI,” he said. “But when you get into systemic organizational shifts where you’ve addressed how information flows through your organization and how decisions happen, that becomes a lot harder to calculate.”

The drop of investment is not really a retreat, it’s a triage. Kevin Dherman, Senior Vice President, Platform and SaaS, SYSPRO

CURRENT TECHNOLOGIES USED 2027

Developing

Established

Advanced+

ERP/MRP systems

63%

58%

71%

53%

Industrial software

54%

52%

55%

60%

Cloud systems

45%

42%

49%

47%

Sensors/data capture

38%

32%

37%

60%

Robotics/ automation

36%

27%

45%

40%

Advanced analytics

27%

16%

27%

67%

AI/machine learning

25%

19%

25%

47%

$2.59M

Average intended technology spend over the next three years among respondents planning to invest, up from $1.57M in 2026

TECHNOLOGY SPEND BREAKDOWN (NEXT 3 YEARS) Kevin Dherman, Senior Vice President, Platform and SaaS at SYSPRO, interpreted the higher level of ROI uncertainty among Advanced+ firms as a sign of experience rather than hesitation. “They’re the only ones in this group who’ve actually finished a major project, and everybody else might be answering from a plan,” he said. Dherman noted that a company’s first pilot project tends to go smoothly, but becomes more complicated when they try to scale up that success across the rest of its operation. “I think they learned that the first project ran quite successfully because they ran it on one line. Project Two for them means fixing up the data on the other 11 lines, and they didn’t budget for that,” he said. That, in Dherman’s view, is also what’s behind this year’s steepest declines in investment intent. Technologies like 3D printing, virtual reality and digital twins — “all the stuff that really demos well,”— are getting deprioritized as manufacturers redirect budget toward the less visible, less exciting work of fixing their data foundations before scaling further. “The drop of investment is not really a retreat, it’s a triage,” he said.

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

$10M - $20M

$20M+

14%

Up to $99,999

$5M - $10M

21%

$1M - $5M

33%

$100,000 to $499,999

19%

$500,000 - 1M

PLANNED TECHNOLOGY INVESTMENT (NEXT 3 YEARS), 2027 VS. 2026

2027 51%

Artificial intelligence 40%

Robotics, automation

38%

Cybersecurity 31%

Data capturing machine/ shop floor

48% 44%

38%

30% 33%

Advanced analytics 3D printing, additive mfg.

20%

Cloud computing

19% 16%

Energy management systems 12%

Digital twinning Virtual reality

64%

44%

31%

ERP

2026

40% 38% 26%

17% 20%

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2027 ADVANCED MANUFACTURING OUTLOOK REPORT

DATA MANAGEMENT & GOVERNANCE

TRUST ISSUES:

POLICY ADOPTION IS FALLING AS DATA COLLECTION GROWS

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

Overall, just 42% of those groups say they have a formal data governance policy in place, down from 61% in 2026 — a decline Lee called out directly. “It shows a trajectory, but a slower one at this point, especially with governance down 18 points versus last year,” she said. “Governance is going to be key, and if manufacturers don’t have that, I suspect it’s going to be a mad rush for all of them to catch up in the near future.” It’s worth noting that 22% say they don’t know whether a policy even exists within their oganization, an answer that didn’t register at all last year.

Data you can’t trust is data you can’t use Scott McNeil-Smith, Vice President, Manufacturing Sector Performance at EMC, said the core issue is whether companies are collecting data they can trust. “There’s a big difference between having data and operating from trusted data,” he said. “That’s the problem with manual data. People get into a meeting and it’s like, well, where did you get your numbers? And you can’t get past that. It just grinds the productivity.” McNeil-Smith said he often sees companies try to jump straight from manual processes to AI, without building that foundation first. “People believe they can go from spreadsheets and paper and pen right to AI,” he said. “Really, it’s about stabilizing the process, capturing

Photo: © Adobe Firefly

anufacturers are still leaning on familiar, low-tech methods to collect their data. Among respondents with companies at a Developing or higher stage of digital transformation, spreadsheets remain the most common approach (64%), followed by accounting software (60%) and ERP systems (53%) — the latter differs for Advanced+ firms, 73% of whom say they rely on ERP as their primary method and just 33% are still using spreadsheets. Notably, manual data collection increased across the board, up to 47% of total respondents this year from 33% in 2026. But the increase in manual methods doesn’t worry Sarah Lee, Senior Research Director at IDC. “Manual data collection isn’t necessarily a bad thing. Data collection is better than no data collection,” she said. “The concerning part is more the governance part of it. Once you collect data, the next step for adopting technology is governance.” Stewart Cramer, Chief Program Officer at NGen, said manufacturers often underestimate how much AI is already built into the systems they’re already running, which makes governance a more urgent question than many realize. “AI is already in your shop, whether you know it or not — there’s AI all over your organization,” said Cramer. “So you better start thinking about data.”

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DATA MANAGEMENT & GOVERNANCE

Governance is going to be key, and if manufacturers don’t have that, I suspect it’s going to be a mad rush for all of them to catch up in the near future. Sarah Lee, Senior Research Director at IDC

the transactions correctly, and then governing the data and creating visibility — then adding intelligence.” John Preiditsch, President and CEO of Six S Partners, made a similar point. In his view, many manufacturers are rushing toward AI and analytics before building the process discipline and data foundations needed to support them. “All the analytics in the world with bad data and insert AI analytics isn’t going to help,” he said. “So some of the fundamentals, I think it’s kind of go-back-to-basics time.” For manufacturers still relying on spreadsheets, manual processes and disconnected systems, he argued that the focus should be on establishing consistent processes and trusted data before expecting advanced technologies to deliver meaningful results. Casey Sim, Senior Manager, Engineering & Quality at KUMI Canada, described his own company’s approach as deliberately cautious. “We’re focusing on establishing the data foundation, and we’re not really in a huge hurry to rush into the AI portion of it until we’re comfortable with it.” Where manufacturers do put their data to work is mostly internal: 66% use it to improve operational efficiencies and 36% for supply chain insights. Advanced+ firms are twice as likely to use data to build new business models (40% vs. 22% overall). One in five respondents (20%) say they don’t monetize or leverage their data at all — up from 8% in 2026. Lee flagged this as the bigger concern of the two findings. “That’s a bigger concern, because data and technology are going to be needed to continue to be resilient, to enhance business processes and to understand what’s happening inside the shop floor,” she said. “That shows a bit of a drop in how manufacturers are prioritizing insights and data.” Asked whether this points to uneven digital readiness across the sector, Lee said, yes and no. “There’s a large percentage collecting data, but from a technology adoption standpoint, there are going to be larger barriers ahead and it will be more challenging for manufacturers.”

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

CYBERSECURITY The survey found that manufacturers have taken at least one step to protect against cyber threats as they digitize, led by staff training (72%), security infrastructure (70%) and risk assessments (57%). Incident response plans remain less common overall (34%) but far more common among Advanced+ firms (57%). Overall, 15% of respondents say they experienced a cybersecurity incident in the past 12 months. Advanced+ firms are notably better prepared across the board — 86% have security infrastructure in place, compared with 70% overall, and 79% have conducted a risk assessment, against 57% overall. That preparation doesn’t necessarily make them less of a target, though: 13% of Advanced+ firms reported a cybersecurity incident in the past 12 months, almost identical to the 15% reported across every other maturity tier.

42%

of Developing-stage or higher firms have a formal data governance policy in place, down from 61% in 2026.

People believe they can go from spreadsheets and paper and pen right to AI. Really, it’s about stabilizing the process, capturing the transactions correctly, and then governing the data and creating visibility — then adding intelligence. Scott McNeil-Smith, Vice President, Manufacturing Sector Performance, EMC

HOW COMPANIES ARE COLLECTING DATA

HOW COMPANIES MONETIZE/LEVERAGE DATA 2027

2026

Spreadsheets

Operational efficiencies

66%

70%

Accounting software

Supply chain insights

36%

38%

New business models

22%

35%

MRP

Analytics for sale

20%

30%

Sensors/Big data

New services

16%

30%

Other

We do not monetize or leverage data

20%

64% 60% 53%

ERP

47%

Manual processes

None of the above

32% 25% 3%

HAS YOUR COMPANY EXPERIENCED A CYBERSECURITY INCIDENT IN THE PAST 12 MONTHS?

Yes

DO YOU HAVE A DATA GOVERNANCE POLICY? Yes

15%

I don’t know

Developing

23%

29%

85% CYBERSECURITY MEASURES TAKEN Established

48%

24% 50% Advanced+

26%

15% 8%

77%

2027

Developing

Established

Advanced+

Staff training

72%

71%

76%

57%

Security infrastructure

70%

65%

73%

86%

Risk assessments

57%

55%

53%

79%

Incident response plan

34%

21%

43%

57%

Cyber insurance

31%

35%

29%

14%

Penetration testing

26%

23%

31%

21%

None

11%

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

TECHNOLOGY ADOPTION

AI AND AUTOMATION:

n both our 2025 and 2026 surveys, limited capital budget ranked as the top barrier to manufacturers’ technology strategy. This year, resistance to change replaced it as the top barrier, rising from 40% to 49%. The share of respondents citing limited capital budget as a barrier fell from 52% to 34%, an 18-point drop and the largest shift of any barrier in the question. Resistance to change is concentrated at the earlier stages of maturity: 65% of Developing-stage respondents cite it as a barrier, compared with 37% at the Established stage and 27% among Advanced+ firms. The challenge appears to ease as manufacturers become more digitally mature. Legacy system integration (42%) and lack of skills (36%) are the next most-cited barriers overall. Skills gaps are far less common among Advanced+ firms, cited by just 13%, compared with 40% of Developing-stage respondents. Stewart Cramer, Chief Program Officer at NGen, invoked a quote attributed to Peter Drucker, the Austrian-American management consultant widely regarded as the father of modern management theory.

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

“There’s a saying Peter Drucker said: ‘culture eats strategy for breakfast’,” he said. “If you’re trying to implement technology and your workforce doesn’t know how to use it, or they’re terrified it’s going to put them out of work, you get a lot of pushback. But if you prepare people for the change you’re trying to create and you bring them in as partners in it, you overcome a lot of that pushback.” John Preiditsch, CEO of Six S Partners, said the pattern is often self-inflicted. “Many companies think that the real project is the selection of the technology, but the plan to execute and the plan to adopt a new way of doing things — if you don’t invest time on that, you’re going to be met directly with resistance,” he said. “It’s almost making your own resistance.”

Automation is speeding up and splitting apart Most respondents (65%) say their operations still require significant human involvement, though the composition of that group is shifting.

Photo: © Graphics / Adobe Stock

THE HUMAN SIDE OF TECH BECOMES THE BIGGER CHALLENGE

A lot of times when we connect with clients, it seems they’re looking at AI as robotic process automation, and not really as agentic — something that can think and do things on its own. A lot of companies don’t have the infrastructure to actually deploy some of these tools. Vishen Maharaj, Director, AI & Machine Learning, MNP Digital

Minor automation rose from 26% to 36% overall — and to 52% among Developing-stage firms specifically — while the middle tier, machine-driven systems still needing meaningful human input, shrank to 29%. A smaller group is moving toward full automation. The share reporting primarily machine-driven systems with minimal human intervention jumped from 2% to 12% overall, and to a full 33% among Advanced+ firms — up from just 2% a year ago. Machine-driven automation overall now describes 53% of Advanced+ firms, against 28% of respondents as a whole. Meanwhile, the share reporting no automation systems in place at all also rose, from 2% to 7%. Casey Sim, Senior Manager, Engineering & Quality at KUMI Canada, said his company has taken a deliberately incremental approach rather than trying to automate everything at once. “There’s no need to target saturating the whole operation all at once,” he said. “If we start with a small application and then scale it up, it builds confidence in your organization, and the risk footprint is much more manageable.” Among manufacturers at the Developing stage of digital transformation or higher, AI and machine learning use shows the same maturity split: 68% of respondents say they’re using AI or ML somewhere in the business, but that climbs to 87% among Advanced+ firms, where only 13% report no use at all, compared with 32% across the full sample. That use is concentrated within a few functions: production leads every tier (34% overall, 60% among Advanced+), followed by quality (18%) and supply chain (17%). Notably, maintenance jumps to 33% for Advanced+ firms versus 16% overall.

Vishen Maharaj, Director, AI & Machine Learning at MNP Digital, said much of the hesitation elsewhere comes down to a narrower view of what AI can do, combined with gaps in the infrastructure needed to run it. “A lot of times when we connect with clients, it seems they’re looking at AI as robotic process automation, and not really as agentic — something that can think and do things on its own,” he said. “A lot of companies don’t have the infrastructure to actually deploy some of these tools.” Cameron Gray, Advanced Manufacturing Sector Manager at the Ontario Centre of Innovation, said even manufacturers eager to invest often hold back because they lack in-house AI expertise. “A lot of companies don’t want to be in a position where they have to rely on a third-party contractor to come in and resolve issues with their operating technology, and therefore are somewhat reluctant to make the jump to full AI integration,” he said. “Those skill sets are generally in the tech sector, and you’re looking for a whole different type of candidate than what you’ve ever had to have before.” Sarah Lee, Senior Research Director, Manufacturing IT Strategies at IDC, said the answer isn’t necessarily to push harder toward advanced AI use cases. “You may just need predictive or preventative maintenance and AI. You may need just generative AI. You may not be ready for AI agents on the shop floor,” she said. “It’s cutting through the noise, cutting through the hype.”

Identifying the disconnect Nearly every functional pairing shows up as needing better collaboration to implement new technology: operations and supply

LEVELS OF AUTOMATION (DEVELOPING STAGE OR HIGHER) 2027

2026

2025

Minor automation, processes mostly require human involvement

36%

26%

23%

Machines, processes require significant human involvement

29%

41%

39%

Machine-driven, some human intervention

16%

28%

31%

Primarily machine-driven systems, minimal human intervention

12%

No automation systems in place

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

TECHNOLOGY ADOPTION

A lot of companies don’t want to be

WHERE AI/ML ARE BEING USED?

in a position where they have to rely

2027

Developing

Established

Advanced+

Production

34%

23%

41%

60%

Quality

18%

22%

Supply chain

17%

15%

20%

Maintenance

somewhat reluctant to make the jump

16%

11%

18%

33%

Finance

16%

18%

14%

13%

to full AI integration.

16%

19%

14%

13%

Other

13%

14%

13%

Not at all

32%

42%

25%

13%

on a third-party contractor to come in and resolve issues with their operating technology, and therefore are

Cameron Gray, Advanced Manufacturing Sector Manager, Ontario Centre of Innovation

chain/procurement (50%), engineering and production (48%), demand planning and production planning (40%), and sales and customer service each with operations (39% apiece). That need doesn’t fade with maturity. Advanced+ firms report even higher demand for collaboration between operations and supply chain (60%) and between customer service and operations (47%). Still, 13% of Advanced+ firms say no significant collaboration improvements are needed, against just 6% overall. The challenge, the roundtable agreed, isn’t just getting departments to work together. Several participants stated that technology projects often stall because leaders aren’t always aligned on what success looks like in the first place. Operations, IT, finance and HR may all be working toward different outcomes, making it harder to move projects beyond the pilot stage. “There’s still a lot of different silos when it comes to what does success look like for you — for a plant manager, operations officer, versus a CIO versus a CHRO versus a CFO or CEO,” said Lee. “There is going to be a need to truly have all the leaders sit at the table and understand what success looks like for each one.”

BARRIERS TO TECHNOLOGY STRATEGY 2027

2026

2025

Resistance to change

49%

40%

35%

Legacy system integration

42%

48%

38%

Lack of skills

36%

45%

Funding challenges

34%

52%

51%

Fast-changing tech

28%

30%

Lack of leadership vision

23%

25%

21%

Hard to find resources

23%

13%

21%

Pressure for short-term results

23%

39%

31%

Too many tech choices

23%

31%

33%

Fear of failure

16%

14%

18%

None of the above

Funding challenges as a barrier (2026 vs 2027)

RESISTANCE TO CHANGE BY MATURITY Developing

Established

Advanced+

52%

34%

Resistance to change as a barrier (2026 vs 2027)

65%

37%

27%

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

40%

49%

A DV E RTO RI A L

MEASURE TO MANAGE:

Machine Monitoring’s Role in Advanced Manufacturing Why reliable plant-floor data is the starting point for sustainable continuous improvement. BY DARRYL POWELL

fter 22 years at Toyota Motor Manufacturing Canada in production, quality, team leadership, launch and training roles, I have learned that sustainable improvement rarely begins with a complicated technology project. It begins with disciplined observation, reliable data and a structured method for converting problems into action. At Toyota, the foundation of our teams is standardized work, production tracking, KPI management and structured problem solving to improve safety, quality, delivery, cost, team member development for operational stability. We did not collect data simply to make reports. We measured performance, at the shop floor, to understand the current condition, identify the gap, investigate its causes and confirm whether root cause had been identified and corrected to produced a lasting improvement. That experience shapes how I view the findings in The 2027 Advanced Manufacturing Outlook Survey included 156 respondents and found that reducing operating costs is now the leading operational priority, identified by 45 per cent. Improving production throughput was selected by 38 per cent, addressing labour and skills gaps by 36 per cent, and improving equipment efficiency by 30 per cent. These concerns are closely connected. A manufacturer cannot reliably reduce cost, improve throughput or make better use of its workforce without understanding what is actually happening on the plant floor. The survey also identified a troubling movement away from the foundations needed to achieve those objectives. Manual processes as a data-collection method increased from 33 per cent to 47 per cent. The percentage of respondents saying they do not monetize or leverage their data rose from 8 per cent to 20 per cent. Data-governance policy adoption declined to 42 per cent, although it remains significantly higher among Advanced+ manufacturers at 77 per cent. From a continuous-improvement perspective, this is not simply a technology gap. It is a visibility and management gap. When production information is collected manually, consolidated after the fact or interpreted differently by each department, teams spend valuable time debating the numbers. Supervisors react to the loudest problem. Maintenance is called after capacity has already been lost. Improvement teams investigate issues using incomplete information, and management makes decisions based on averages that may hide the real causes of poor performance. The reality is there is a cost to everything.

Safety incidents have a cost, Quality issues cost of rework, scrap and customer disappointment. Productivity suffers and cost to make those numbers up keeps growing. The cost of being reactive instead of proactively searching for the root cause at the process. There is also a significant cost to under-utilizing and not developing our team members and leaders. Giving them visibility to what is actually happening in the process, combined with their knowledge and experience, creates greater job ownership and supports a culture of daily continuous improvement. Machine monitoring and manufacturing execution systems can change that operating model by creating an objective record of production activity. A monitoring platform can capture uptime, downtime, cycle times, production counts, throughput, scrap and machine status. Operators can add the essential context, such as downtime reasons, quality concerns, material shortages or tooling problems, that explains why an event occurred. The goal is not to replace the knowledge of operators. It is to connect that knowledge to accurate machine data so that everyone can work from the same current condition.

OEE creates a common language

Overall Equipment Effectiveness offers manufacturers a practical framework for beginning this journey. OEE brings together three essential measures: • Availability: Was the equipment running when it was scheduled to run? • Performance: While running, did the equipment operate at its expected rate? • Quality: How much of the output met requirements without becoming scrap or rejects? Together, these measures help distinguish whether capacity is being lost through downtime, slow cycles or quality problems. The calculation itself is only the beginning. The real value comes when a team reviews OEE and its underlying losses at a regular daily or shift meeting. Instead of saying, “That machine had a bad day,” the team can ask specific questions: What stopped? How long was it stopped? Was that loss planned or unplanned? Did actual cycle time meet the standard? Was quality affected? Has this condition happened before? This is where machine monitoring becomes a continuous-improvement platform rather than another dashboard. ShiftWorx categorizes downtime using coded reasons, separates planned from unplanned stops and supports analysis of the leading causes of lost productivity. Its OEE dashboards,

trend analysis and bottleneck identification can help teams prioritize corrective actions and verify whether improvements are sustained.

Connecting the plan to reality

“In this modern era, when effectively coupled with an ERP planning system, the ability to gain deep insights can create lasting value for any organization that develops a culture of measuring to manage.” ERP establishes what the organization plans to make, the resources required, expected production standards and customer commitments. Machine monitoring and MES provide the execution evidence: what ran, what stopped, what was produced and where actual performance differed from the plan. When these systems are connected, manufacturers can compare expected and actual cycle times, improve production standards, analyze schedule attainment and return more accurate performance information for costing and future planning. ShiftWorx supports ERP integration and uses machine and operator information to provide real-time visibility into production performance. Manufacturers do not have to begin with an enterprise-wide transformation. A lean and agile approach starts with one important machine, line or constraint. Establish the baseline, agree on the definitions, involve the operators, review the information consistently and solve the largest recurring loss. Once that management rhythm is working, scale the approach across additional assets and departments. The survey shows that manufacturers face real cost, labour and productivity pressures. The answer is not simply collecting more data. It is collecting trusted data, giving it operational context and building a culture that uses it every day. Technology makes the information visible. Leadership, standard work and structured problem solving turn that visibility into results. Darryl Powell is an Account Executive with 6S Software Inc. and specifically “ShiftWorx” – the proven and most cost effective Machine Monitoring system on the market. As a manufacturing operations, lean and continuous-improvement leader. He spent 22 years with Toyota Motor Manufacturing Canada in production, quality, project, launch, leadership and training roles. He is a certified Toyota Production System and Toyota Job Instruction trainer with experience in standardized work, root-cause analysis, KPI management, quality control and team development. For more information visit www.MachineMonitoring.com

TARIFFS & SUPPLY CHAIN

TARIFF RESPONSE:

MANUFACTURERS ARE DEFENDING, NOT EXPANDING

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

Cameron Gray, Advanced Manufacturing Sector Manager at the Ontario Centre of Innovation, said that pullback is showing up directly in the digital modernization work his organization supports. “A lot of companies that had previously been working on digital modernization projects and programs prior to a lot of the tariffs being applied — a lot of those projects got put on hold,” he said.

Fewer manufacturers are investing in supply chain technology Every major strategy for managing inflation and rising costs declined this year compared with 2026: seeking alternative suppliers (53%, down from 67%), streamlining processes (52%, down from 60%), cutting operational expenses (51%, down from 56%) and investing in efficiency-enhancing technologies (40%, down from 48%). Only raising prices held steady, at 48%. Adoption of technology specifically aimed at mitigating supply chain risk fell even more sharply. Advanced analytics dropped from 36% to 23%, AI and machine learning from 36% to 13%, cloud supply chain management systems from 31% to 11%, and IoT sensors from 15% to 10%. The share of respondents reporting no supply-chain-risk

anufacturers’ top responses to tariff pressure remain largely operational rather than technological. Diversifying suppliers is still the most common strategy, though it fell from 55% to 47% this year. Raising prices (44%), forming alternative partnerships (38%) and cutting expenses (38%) round out the top responses. Cutting expenses is more common among Advanced+ firms (67%), which are also more likely to have paused hiring (40%, versus 19% overall). Pursuing new revenue streams declined the most of any strategy, down from 41% to 26%. Scott McNeil-Smith, Vice President, Manufacturing Sector Performance at EMC, said that pattern reflects a shift in posture across the sector. “Companies are being more defensive before they expand,” he said. “They’re defending rather than expanding.” The impact of tariffs on technology investment is mixed. Nearly half of respondents (46%) report no change in their investment plans, but those reporting a significant reduction rose from 11% to 17% — and climbs to 33% among Advanced+ firms specifically, a reversal of the pattern seen elsewhere in the survey, where more mature firms are usually more resilient, not less exposed.

technology in place nearly doubled, from 33% to 59%. Advanced+ firms are the exception, with more than half (53%) still using advanced analytics for this purpose. Speaking from personal expdrience, Casey Sim, Senior Manager, Engineering & Quality at KUMI Canada, said tariffs raised a more immediate concern than cost. “Our first concern was the inability to get product, rather than the financial impact of the tariff,” he said. “We didn’t need AI or machine learning to identify that — it was very clear and present, and it would have had an immediate impact on our operation.” Sim said the company didn’t scale back its larger capital investments, even as it moved quickly to secure a small list of critical suppliers. “When we had more time, on our bigger spend capital items, we didn’t pull back on that type of investment,” he said. Francis de los Santos, Business Consultant, Advanced Manufacturing at Invest Mississauga, said the drop shouldn’t be read as manufacturers ignoring supply chain risk altogether. “The drop in supply chain risk mitigation technology may reflect capacity constraints more than a lack of concern,” he said. “When tariffs hit, especially for SMEs, the first response is often not to implement a new digital platform — it’s to look for alternate suppliers, delay spend and protect cash.” Not everyone agrees that pulling back is the right call. John Preiditsch, CEO of Six S Partners, said cutting investment in supply chain visibility tools now is a risk of its own. “Taking your foot off the gas on investing in tools for supply chain and risk is a bit like dropping advertising when the market is slowing — you’re just going to continue to put yourself into more pain,” he said. “If you don’t know the cost of your product, your alternate sourcing, your inventory exposure and your customer pricing, and you don’t have that digitized, you’re not in control of your numbers. I don’t think it’s a good time to take your foot off the gas. You need to exercise some improvements around your best practises.”

Taking your foot off the gas on investing in tools for supply chain and risk is a bit like dropping advertising when the market is slowing — you’re just going to continue to put yourself into more pain. John Preiditsch, President & CEO of Six S Partners

Our first concern was the inability to get product, rather than the financial impact of the tariff. We didn’t need AI or machine learning to identify that — it was very clear and present, and it would have had an immediate impact on our operation. Casey Sim, Senior Manager, Engineering & Quality at KUMI Canada

SUPPLY CHAIN RISK MITIGATION TECHNOLOGY ADOPTION, 2026 vs 2027

2026 Advanced analytics

36% AI/ML

36% Cloud SCM

31% IoT sensors

15% None

33%

2027

23% 13% 11% 10% 59%

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

TARIFFS & SUPPLY CHAIN INFLATION AND COST-MANAGEMENT STRATEGIES

2027

2026

Seeking alternative suppliers

53%

Streamlining processes to boost productivity

52%

Cutting operational expenses

51%

67%

60%

56% 48%

Raising product/ service prices

48% 40%

Investing in efficiencyenhancing technologies Other No specific strategies in place

48% 8% 3%

TARIFFS’ EFFECT ON TECH INVESTMENT (DEVELOPING+)

2% 3%

59%

Increased somewhat

Increased significantly

17%

Reduced significantly

of Developing+ firms do not use technology to mitigate supply chain risk, up from 33% last year.

TARIFF RESPONSE STRATEGIES 2027

2026

Diversified suppliers

47%

55%

Raised prices

44%

45%

Alternative partnerships

38%

41%

Cut expenses

38%

43%

New revenue streams

26%

41%

Paused hiring

19%

31%

Other

None

11%

2027 ADVANCED MANUFACTURING OUTLOOK REPORT

27%

Reduced somewhat

46%

NO change

33%

of Advanced+ firms report a significant reduction in tech investment, nearly double the overall rate.

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Wainbee Limited | 5789 Coopers Avenue, Mississauga, Ontario, L4Z 3S6 1-888-WAINBEE (924-6233) | salesleads@wainbee.com | WAINBEE.com

From individual components to engineered systems, Wainbee brings together leading technologies, technical expertise and service to keep Canadian industry moving.