ABB: Why Balance is Key for Metals Manufacturers in 2025

As 2024 draws to a close, manufacturers are laser-focused on what the sector will look like in 2025.

Among them in ABB, whose Global Business Line Manager Metals for Process Industries, Fred Esterhuizen, offers some compelling thoughts in relation to the months ahead. 

"2025 will be a year of balancing acts for metals manufacturers," asserts Fred. 

"As electric arc furnace usage rises globally and scrap recycling becomes more important and prominent, industry players must juggle regional demands, new tech and a pressing skills gap to continue to fuel sustainable, shared growth."

Without doubt, metals manufacturers must prepare for a demanding year filled with complexities. Companies will face the challenge of striking a delicate balance between supply, demand, technological advancements and sustainability, all while contending with volatile geopolitical shifts and economic uncertainty.

Against this backdrop, Fred shares six critical areas where maintaining equilibrium will be essential.

Shifting supply chains

The reconfiguration of global supply chains has emerged as a paramount challenge for metals manufacturers.

Geopolitical disruptions, including ongoing tensions and trade conflicts, have fundamentally reshaped material sourcing strategies. Manufacturers are increasingly diversifying their supply networks, a strategy that mitigates risk but simultaneously introduces logistical complexities and elevated trading costs.

The rise of nearshoring and reshoring, in North America and Europe especially, represents a significant structural shift. While these localisation efforts bolster supply chain resilience, they demand substantial capital investment and a skilled workforce, creating pronounced regional economic pressures.

Economic uncertainty

Economic volatility continues to challenge the metals manufacturing sector.

With many countries navigating the delicate balance between economic growth and inflation control, manufacturers must demonstrate unprecedented agility. The automotive industry's electric vehicle (EV) transition epitomises this complexity, driving demand for lightweight materials such as speciality alloys and aluminium while exposing manufacturers to significant market uncertainties.

Regional variations in construction activity further complicate demand forecasting. Slower growth in emerging economies contrasts sharply with increased infrastructure spending in developed markets, necessitating sophisticated demand prediction tools and a diversified customer approach.

Sustainability pressures

ESG considerations have gone from strategic considerations to fundamental operational imperatives. The pursuit of economic circularity is driving innovative approaches to metals manufacturing and recycling, with manufacturers increasingly focused on recovering valuable materials like copper and steel to reduce dependency on virgin resources.

Regulatory frameworks are accelerating this transition. The European Union's Carbon Border Adjustment Mechanism (CBAM) exemplifies how governmental policies are creating economic incentives for greener production methods. Transitioning to electric arc furnaces or hydrogen-based steelmaking represents a significant technological and financial undertaking, particularly challenging for small and medium-sized manufacturers.

Technological transformation

Industry 4.0 continues to reshape the metals manufacturing landscape. Advanced analytics, AI-driven predictive maintenance and IoT-enabled equipment are revolutionising production processes, offering unprecedented opportunities for efficiency and quality improvement. However, implementing these technologies at scale requires substantial investment in training and infrastructure.

The growing digital skills gap represents a critical challenge that demands sector-wide collaboration. Manufacturers must develop comprehensive strategies to build a workforce capable of operating and maintaining increasingly sophisticated manufacturing systems.

Market volatility

Unprecedented market volatility in critical inputs poses significant challenges for cost management. The aforementioned rise of EVs and renewable energy technologies has intensified competition for materials like cobalt, nickel and lithium, driving substantial price fluctuations.

Manufacturers must develop sophisticated hedging strategies and explore alternative materials to mitigate financial risks.

Collaboration and innovation

Navigating the complexities of 2025 will require unprecedented collaborative efforts. Partnerships between manufacturers, governments and technology providers will be crucial in accelerating the adoption of cleaner technologies and ensuring stable raw material supplies.

Recent developments in lightweight composites and advanced alloys demonstrate the potential of industry-wide cooperation. These innovations promise to unlock new applications and markets, offering a beacon of opportunity amid considerable uncertainty.

As Fred contends, 2025 will indeed be a year where metals manufacturers will be forced to work on their balancing acts. Success will hinge on strategic agility, collaborative innovation and a commitment to sustainable transformation. The road ahead is challenging but, for those prepared to adapt, significant opportunities await.

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