State of the State 2025: Energy, workforce among top issues for manufacturing sector

Energy and workforce availability, higher costs, and global uncertainty primarily related to tariffs and trade wars are on the minds of U.S. and Arkansas manufacturing industry executives as they navigate 2025.

The U.S. manufacturing sector began 2025 with 12.76 million estimated jobs in January, down 0.8% compared with 12.86 million jobs in January 2024, according to the U.S. Bureau of Labor Statistics (BLS). Jobs in the sector are up 0.1% compared with January 2020. U.S. manufacturing job numbers peaked at 19.55 million in June 1979.

Manufacturing job growth in Arkansas outpaced U.S. trends. The state had 163,500 jobs in December 2024, the most recent data available, up 2.3% compared with December 2023. The number also is up 5.3% compared with December 2020. Arkansas manufacturing jobs set a record with 247,600 in February 1995, according to the BLS.

The top three Arkansas metros with manufacturing jobs as of December 2024 are Northwest Arkansas (31,700 jobs), central Arkansas (20,900), and the Fort Smith metro (19,500). The three metro areas combined account for 44.1% of the state’s manufacturing jobs.

The Deloitte 2025 Manufacturing Industry Outlook notes that the U.S. manufacturing sector in 2024 benefited from more than $31 billion in clean-technology manufacturing facility investments that are expected to create about 27,000 jobs. (As of this publication date, it is unclear if actions by President Donald Trump to reverse alternative energy policies and legislation will reduce the announced investments and job creation estimates.) Also, construction spending on existing U.S. manufacturing plants reached a record $238 billion in 2024, according to Deloitte.

Randy Zook, president and CEO of the Arkansas State Chamber of Commerce and Associated Industries of Arkansas, said in a Feb. 6 interview that he does not yet know how threatened and announced tariffs will impact the state’s manufacturing sector.

“It’s a headwind at this point because of the uncertainty,” Zook said. “It may be that the retailers may catch more of it (tariff impact), but hopefully the manufacturers will not.”

He said the two primary challenges to adding more jobs in the sector are productivity improvements and workforce availability. He said manufacturers continue to find ways to automate processes, which results in “a lot of healthy developments around the state,” but do not always add a lot of jobs. Part of the push to automate is because it remains difficult to find workers.

“Workforce is still a challenge, there is no question about that, and we have to do more to prepare our people for more technical career opportunities,” Zook said.

He said the worker training message has caught on with decision-makers and most educators, but the system still doesn’t do enough to encourage students to take more foundational courses.

“We’re allowing a lot of kids to ease their way through their senior year for instance,” he said, adding that a lack of course discipline puts people behind when entering the workforce.

Zook stressed that adequate energy supply also is a concern among manufacturers. Electricity demand generated by data centers and crypto coin mining “has accelerated at an unprecedented rate.”

Lauren Waldrip, executive director of the Arkansas Advanced Energy Association, said in a recent report that energy shortages could happen nationwide as early as 2026.

“We are looking at an energy crisis right in the face, so it’s really important that we have policies that enable generation rather than hindering that opportunity,” Waldrip said.

The Deloitte report on 2025 manufacturing expectations cites interest rates, reduced consumer spending, and trade policy changes as some of the factors that could impact momentum in the sector.

“Potential policy changes after the 2024 U.S. elections, as well as elections across the globe, may have impacts on supply chains, demand, and long-term investment in manufacturing,” Deloitte noted in an excerpt from the report. “Changes to trade policy and tariffs could drive up raw material and component costs and could have ripple effects throughout the supply chain. Potential adjustments to parts of the Inflation Reduction Act could impact investment in certain aspects of clean technology manufacturing in the United States.”

According to the National Association of Manufacturers, 3.8 million manufacturing jobs will likely be needed in the next decade, and 1.9 million jobs may be unfilled if workforce development efforts fall short. The association estimates that 2.8 million of the sector jobs opening will come from workers reaching retirement age.

Editor’s note: The State of the State series provides reports twice a year on Arkansas’ key economic sectors. The series publishes stories to begin a year and around mid-year to provide an update on the state’s economy. Link here for the State of the State page and previous stories.