Manufacturers Slow to Adopt AI, Report Finds

Only 7% are actively looking into or have already filled open roles with AI technology. But while adoption of AI technologies is low, nearly a quarter of manufacturers (24%) are interested in using AI to supplement the workforce.

CHICAGO — December 11, 2023 — As advancements in generative AI attract attention across industries, the manufacturing industry is slow to adopt AI technologies, according to a new industry report. The latest Sikich Industry Pulse found that one-fifth of manufacturing executives have no plans to incorporate AI into their operations, and more than 60% of executives are unsure if AI will add any benefit to their companies or have researched AI but have not found an appropriate use case. Less than 20% of manufacturers have begun to implement AI technologies.

At the same time, manufacturers are still struggling to attract and retain labor. Of executives surveyed who said they are not optimistic about business prospects over the next six months, 45% cited labor shortages and 43% cited increasing labor costs as concerns. Both labor shortages and labor costs were more frequently listed as concerns of respondents compared to Sikich's previous Industry Pulse report, which was released in June.

Only 7% are actively looking into or have already filled open roles with AI technology. But while adoption of AI technologies is low, nearly a quarter of manufacturers (24%) are interested in using AI to supplement the workforce.

"Faced with recruitment and retention challenges, manufacturers have a unique opportunity to improve efficiencies and automate back-office functions with technologies like AI," said Jerry Murphy, partner-in-charge of manufacturing and distribution services at Sikich. "AI is a lot more than ChatGPT, and when deployed properly, AI tools can help manufacturers reduce costs, generate demand, improve customer relations and more quickly bring products to market. It's important that manufacturers proceed thoughtfully though, assessing the risks and challenges associated with AI alongside its exciting potential."

Cybersecurity is an unexpected challenge

Just as manufacturers are slow to adopt AI technologies, most also have a limited security infrastructure. While manufacturing executives are confident in their cybersecurity preparedness - ranking their confidence a seven on a scale of one to 10 - cyberattacks are still prevalent in the industry. More than one third (34%) of respondents experienced a cyberattack in the past five years.

Cybersecurity preparedness involves putting a number of measures in place to prevent attacks, including system controls, network controls, employee training, and more. Yet 58% of survey respondents only have three or fewer cybersecurity measures in place.

"Manufacturers are a prime target for hackers and vulnerable to ransomware in particular because of their need to avoid factory shutdowns," said Thomas Freeman, a director in Sikich's cybersecurity practice. "Hackers have many ways they can break into a company's systems - from phishing scams to DNS attacks. A thorough defense that includes firewalls, regular security audits, penetration testing, security training and threat intelligence is necessary to thwart attacks and protect company data."

Sikich's Industry Pulse: Manufacturing and Distribution also collected benchmark data on manufacturing executives' industry optimism, technology system implementations, and companies' transition to the cloud.

Sikich surveys manufacturers and distributors multiple times throughout the year on a range of business topics to create industry benchmark data. In August, Sikich surveyed more than 100 executives from manufacturing and distribution companies across sectors including industrial equipment, wholesale and distribution, metal fabrication, food and beverage, apparel, footwear and textiles, and transportation. View the latest Sikich Industry Pulse: Manufacturing and Distribution report here.

About Sikich LLP
Sikich LLP is a global company specializing in technology-enabled professional services. With more than 1,700 employees, Sikich draws on a diverse portfolio of technology solutions to deliver transformative digital strategies and ranks as one of the largest CPA firms in the United States. From corporations and not-for-profits to state and local governments and federal agencies, Sikich clients utilize a broad spectrum of services* and products to help them improve performance and achieve long-term, strategic goals.
*Securities offered through Sikich Corporate Finance LLC, member FINRA/SIPC. Investment advisory services offered through Sikich Financial, an SEC Registered Investment Advisor.  

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