GEP’s latest Global Supply Chain Volatility Index reveals a sharp rise in precautionary stockpiling across North America and Europe, as manufacturers prepare for potential shortages, higher material prices and rising transportation costs.

October 2026 Key Regional Findings

• ASIA:Index rose to 1.67, from 1.49, signaling the greatest degree of pressure on Asia’s supply network in four months.
• NORTH AMERICA: Index ticks lower to 1.03, from 1.13, but North American manufacturers report greater safety stockpiling and backlog accumulation due to shortages.
• EUROPE:Index rises to 0.78, from 0.66, reflecting growth in purchasing and inventories. Germany was a key driver of these trends.
• UK:Index drops to a three-month low of 0.39, from 0.59, signaling another sharp climbdown in supply-chain pressures for U.K. manufacturers.

GEP Reports Surge in Manufacturing Stockpiling

The indicator tracking precautionary stockpiling among North American manufacturers more than doubled in October, according to the latest GEP Global Supply Chain Volatility Index.

European manufacturers also increased their inventory buffers, with Germany contributing significantly to the rise in purchasing activity.

The October 2026 report, based on surveys of approximately 27,000 businesses across more than 40 countries, found that manufacturers were buying additional materials to protect against potential shortages and further price increases.

Manufacturers Accelerate Stockpiling

Precautionary stockpiling reached historically high levels globally, with North American manufacturers reporting their strongest inventory-building activity in five months.

The increase comes despite a moderation in global purchasing growth, raising questions about how long the current demand for manufacturing inputs can continue.

John Piatek, Vice President, Consulting at GEP, said:

“Manufacturers are increasingly concerned about what’s ahead, particularly inflation and the risk of renewed supply disruptions. They’re responding by building larger inventory buffers to protect production and manage future costs.  The concern is what happens next. This additional purchasing is supporting manufacturing activity today, but it also ties up working capital. Once inventories are built, purchasing could slow, creating a drag on manufacturing and the wider economy in 2027.”

Global Supply Chain Volatility Index

Asia recorded the highest regional index reading in October at 1.67, up from 1.49 in September, indicating the greatest pressure on its supply network in four months.

Europe’s index rose from 0.66 to 0.78, reflecting stronger purchasing activity and inventory accumulation, particularly in Germany.

North America’s reading eased slightly from 1.13 to 1.03, although manufacturers reported increased safety stockpiling and backlogs linked to shortages.

Meanwhile, the UK’s index fell from 0.59 to 0.39, reaching a three-month low as supply chain pressures continued to ease.

A positive index reading indicates that supply chain capacity is being stretched, with higher values reflecting greater pressure.

Purchasing activity remained resilient globally, with the US, China and Germany among the main contributors to growth. However, overall supply chain pressures eased as material and labour shortages became less pronounced.

Transportation Costs Rise Again

Global transportation costs increased for the second consecutive month, with the transportation cost index reaching a four-month high as oil prices rose throughout October.

Material shortages remained above their long-term average for the eighth consecutive month, although reports of shortages were at their lowest level since March.

Oil, electronic and electrical components, and metals were among the materials most frequently reported as being in short supply.

Labour shortages also eased, with reports of manufacturing backlogs caused by staffing constraints falling to their lowest level since February 2025.

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Oscar Lovera, Chief Operating Officer at Xometry, explains why supplier visibility, certification, and regional sourcing are key to unlocking Europe’s underused manufacturing capacity

Europe’s hidden manufacturing capacity

Ask a procurement lead anywhere in Europe whether there is enough manufacturing capacity, and the instinctive answer is often no.

Order books are full, good suppliers are stretched, and finding a manufacturer that can take on new work at short notice feels harder than it should.

However, the data tells a more interesting story. The capacity is there. What is missing is a reliable way for buyers to find it, qualify it, and trust it.

Europe’s manufacturing capacity paradox

Demand is not the issue.

In a survey of 200 manufacturing executives in France and Germany, conducted in August 2026, order backlogs remained strong in both countries, at 84 percent in Germany and 80 percent in France.

Yet strong demand has not translated into full factory utilisation.

The gap is most pronounced by company size. Some 37 percent of European manufacturers with annual revenue below €50 million are operating at less than 70 percent capacity, compared with just 11 percent of those generating more than €100 million.

The country comparison tells a similar story.

In France, 81 percent of manufacturers are operating at 70 percent capacity or higher, compared with 71 percent in Germany.

That 10-percentage-point difference does not reflect weaker German demand, since its order backlog is slightly stronger than France’s.

It suggests Germany has more available manufacturing capacity that is not yet being matched with demand.

The question, therefore, is not how to build more capacity. It is why the capacity that already exists is so difficult to put to work.

How compliance creates barriers to manufacturing growth

Part of the answer lies in certification and regulatory readiness.

Certification and compliance requirements are the second-most cited operational challenge in both countries, identified by 39 percent of French and 38 percent of German manufacturers. Both figures are above the 30 percent recorded in a companion United States (US) survey.

However, the source of the pressure differs.

In France, 53 percent of manufacturers are preparing for the European Union’s (EU) carbon border rules, compared with 31 percent in Germany.

German manufacturers are more focused on the EU Artificial Intelligence (AI) Act, at 49 percent compared with 45 percent in France.

Although the details differ, the effect remains the same.

Despite having the right machines, skills, and available production hours, a manufacturer can still be out of reach if it cannot provide the necessary credentials.

When procurement teams are under pressure to demonstrate quality, emissions data, and regulatory compliance across their supplier networks, an uncertified manufacturer is not simply spare capacity. It represents a risk they cannot take.

This helps explain why smaller manufacturers account for so much of Europe’s underused capacity.

They are often well equipped to undertake the work, but the cost and complexity of demonstrating compliance can prevent them from appearing on the supplier lists where contracts are awarded.

Why regional sourcing depends on supplier qualification

The timing matters because sourcing strategies are already changing.

Some 54 percent of German manufacturers and 52 percent of French manufacturers expect their customers to move towards more regional sourcing over the next year.

Shorter supply chains should favour manufacturers located closer to demand.

However, proximity alone does not secure business. A nearby supplier must still be qualified, and buyers must be able to verify its credentials.

Regional sourcing increases the value of manufacturing capacity that is already certified and ready to operate. It also exposes how much of Europe’s regional capacity remains difficult for buyers to access.

Resilience is about choice.

Market conditions change constantly, whether through tariffs, geopolitical developments, or capacity constraints. Manufacturers that stay ahead secure flexible options long before they need them.

The same principle applies to cost.

Buyers who can compare price, quality, and delivery speed across a broader supplier base are better positioned to absorb price increases than those dependent on a single supplier relationship.

How smaller manufacturers can unlock new opportunities

For smaller manufacturers, the opportunity is to prepare before demand arrives.

There are three practical priorities:

• Review certification requirements: Audit existing credentials against the requirements of target sectors, including aerospace, defence, automotive, and high-tech manufacturing, and address gaps early.

• Prepare emissions data: Ensure relevant environmental information is available before customers request it.

• Make compliance easier to verify: Present credentials in a format that procurement teams can access and assess quickly. A buyer who can qualify a manufacturer efficiently is more likely to award it work.

None of this means Europe needs to build more capacity.

The machines, skills, and production hours are already there, much of them within smaller manufacturing businesses that buyers have never had a practical way to reach.

What stands between them is proof: credentials that buyers can quickly check and trust.

Manufacturers that treat certification as a route to new business, rather than simply an administrative requirement, will be better positioned to win work in 2027.

Buyers who establish a broader network of qualified suppliers now will also benefit when market conditions change.

Oscar Lovera is Chief Operating Officer at Xometry.

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Swiss robotics company Embodied AI has developed AIR, a factory robot that learns tasks from human operators and uses lightweight, tendon-driven arms designed to make working alongside people safer.

A Different Approach to Robotics

Swiss robotics company Embodied AI has developed a factory robot that learns manufacturing tasks from human operators, typically becoming capable of performing them independently within a month.

Named AIR, the robot combines artificial intelligence (AI) with a tendon-driven design intended to make industrial automation safer and easier to introduce into existing production environments.

Unlike conventional industrial robots, AIR places its motors, gearboxes and electronics inside its torso, leaving its arms lightweight and able to give way on contact.

It also operates on wheels rather than legs, taking advantage of the flat floors found in manufacturing facilities.

Safety by Design

Embodied AI has prioritised mechanical safety, reducing the moving mass of AIR’s arms rather than relying solely on software to restrict movement.

The robot has been designed under ISO/TS 15066:2016, with CE marking planned for 2027.

Francesco Stella, Co-Founder and CEO of Embodied AI, said:

“Hallucination of AI models is acceptable in the digital space because humans review, reject, or correct the output before acting on it. In robotics, however, incorrect actions have immediate and irreversible physical consequences.

When AI is used to taking physical actions, errors can cause severe damage or endanger human lives. Safety and reliability are non-negotiable requirements of physical AI to enter the real world at scale. These are the principles that guided the design of AIR.”

Learning on the Job

AIR begins each task under the control of a human operator, allowing it to contribute to production from its first shift.

Every demonstration is recorded and used to train Embodied AI’s proprietary AI system until the robot can perform the task independently, typically within a month.

Operators remain available to handle unfamiliar situations, while knowledge acquired by one robot can be transferred to others.

The approach allows manufacturers to introduce automation while retaining human oversight during training and operation.

98 Percent Reliability

Embodied AI says its AI technology has already demonstrated its capabilities in paid factory deployments using a separate two-arm industrial robotic cell.

In one project, a major consumer electronics manufacturer tested five funded robotics startups on a cable-handling task.

According to Embodied AI, none of the competing companies met the manufacturer’s performance targets.

Its own system achieved 98 percent reliability against a target of 90 percent.

The result relates to Embodied AI’s existing industrial cell rather than AIR, which is being introduced as a new robotic platform.

From Laboratory to Factory

AIR’s tendon-driven arm design originated from Stella’s doctoral research at EPFL, the Swiss Federal Institute of Technology in Lausanne.

Stella, who previously conducted research at MIT’s Computer Science and Artificial Intelligence Laboratory, founded Embodied AI alongside Chief Technology Officer Kai Junge and Chief Operating Officer Max Polzin.

Both co-founders hold doctorates in robotics, with backgrounds at Cambridge, ETH Zurich and EPFL.

Headquartered in Lausanne, the company is backed by investors including Faber, TechShop, Look AI Ventures, Plug and Play and Vento.

Embodied AI is scheduled to unveil AIR at Humanoid Europe 2026 on 6 November, with CE marking planned for 2027.

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Siemens has introduced an integrated microgrid solution designed to simplify renewable energy integration, improve power reliability and help maintain operations during grid disruptions.

Siemens Targets Energy Resilience

Siemens has launched a new Microgrid Integrated Switchboard (MIS) designed to simplify the deployment of distributed energy resources and improve energy resilience across industrial and commercial facilities.

Announced on 29 October 2026, the pre-engineered solution combines power distribution, protection, automation and intelligent microgrid control within a single platform.

Available in the US, the technology is aimed at organisations seeking to integrate renewable energy and battery storage while reducing the complexity and time involved in microgrid installation.

Manufacturing facilities are among its target applications, alongside data centres, healthcare campuses, commercial buildings and public infrastructure.

Integrating Renewable Energy and Storage

The MIS platform uses Siemens’ SICAM A8000 microgrid control technology to monitor and manage distributed energy resources (DERs), including solar photovoltaic systems, battery energy storage, generators and utility connections.

By coordinating these different power sources, the system enables facilities to manage electricity loads in real time and optimise how available energy resources are used.

A key capability is the transition between grid-connected and islanded operation, allowing facilities to continue operating independently when disturbances affect the main electricity network.

For manufacturers, this provides a means of maintaining critical production activities during power disruptions while supporting the integration of renewable energy technologies.

The system’s vendor-agnostic architecture also allows businesses to combine equipment from different suppliers rather than relying on a single technology provider.

Reducing Deployment Complexity

Siemens has designed the switchboard as a factory-integrated and tested solution, reducing the amount of engineering and integration work required on-site.

By combining preconfigured controls with standardised power distribution equipment, the company aims to shorten installation and commissioning times while reducing project risk.

Jonathan Hill, President of Electrification and Automation at Siemens Smart Infrastructure USA, said:

“Energy resilience has become a business imperative, yet customers need to navigate growing energy complexity without adding operational burdens.”

“The Microgrid Integrated Switchboard brings together Siemens’ expertise in power distribution and microgrid automation, combining the intelligence of a microgrid controller with the reliability of Siemens power distribution equipment in one standardized, scalable solution. This gives customers a simpler path to deploy microgrids faster, reduce complexity, and operate with greater confidence.”

Supporting Industrial Operations

For manufacturing businesses, energy reliability is a key consideration when planning production and managing operational risk.

The MIS solution is designed to help facilities maintain essential operations during grid disturbances by coordinating on-site generation, stored energy and utility connections.

Its real-time monitoring and control capabilities also give operators greater visibility of available power resources and electricity demand.

Siemens says the platform can support a range of industrial energy strategies, allowing businesses to select the combination of generation and storage technologies best suited to their requirements.

The system also includes cybersecurity features such as role-based access controls, encryption and network security capabilities.

Simplifying the Energy Transition

The launch forms part of Siemens Smart Infrastructure’s wider focus on connecting energy systems, buildings and industrial operations.

By bringing renewable generation, energy storage and intelligent controls into a pre-engineered platform, Siemens aims to make microgrid deployment more accessible to organisations seeking greater energy independence and operational flexibility.

For manufacturers, the technology offers a way to combine energy resilience with the adoption of distributed energy resources, without requiring separate systems for power distribution and microgrid control.

The Microgrid Integrated Switchboard is available in the US, with Siemens positioning it as a standardised approach to managing increasingly complex industrial and commercial energy requirements.

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A decade-long partnership between Rolls-Royce and the UK Government aims to advance next-generation jet engine technology, strengthen domestic manufacturing capabilities, and support thousands of highly skilled jobs across the country.

The UK Government and Rolls-Royce have outlined plans for a 10-year, £2.5bn research and technology programme designed to advance gas turbine technology for civil and defence aerospace. 

The proposed initiative represents a major opportunity to reshape the UK’s advanced manufacturing landscape, with a focus on developing more efficient, lower-emission jet engines and securing a domestic role in the next generation of commercial aircraft. 

Central to the programme is Rolls-Royce’s ambition to establish an engine position in the growing, high-volume narrowbody aircraft market, supported by an engine demonstrator project.  

Alongside commercial aerospace development, the investment would preserve important testing and engineering capabilities, reinforcing the UK’s sovereign defence aerospace infrastructure and national resilience. 

Tufan Erginbilgic, CEO of Rolls-Royce, believes the programme is a landmark moment for the UK’s aerospace industry.  

“This is a once-in-a-generation opportunity to lay the foundations for decades of sustainable economic growth across the UK, creating high-value jobs and transforming the country’s advanced manufacturing supply chain.” 

NEXT GENERATION OF COMMERCIAL AIRCRAFT  

The narrowbody market, which encompasses single-aisle aircraft, is expected to provide significant opportunities for aerospace manufacturers over the coming decades. 

New aircraft in this category are anticipated to enter commercial service between the mid and late 2030s, meaning manufacturers are expected to select their engine partners within the next few years. These decisions will take place ahead of potential aircraft launches around the turn of the decade. 

The UK Government’s Industrial Strategy identifies this segment as the largest growth opportunity in aerospace over the next 50 years. Securing a place in the market would therefore provide considerable long-term prospects for Rolls-Royce and the wider UK industrial base. 

A successful programme could generate an additional £120bn for the UK economy over its lifetime, alongside billions of pounds in further domestic investment over subsequent decades. 

SUPPORTING JOBS, SKILLS, AND MANUFACTURING GROWTH  

Beyond developing new engine technologies, the programme is expected to deliver substantial benefits for the UK’s workforce and advanced manufacturing supply chain. 

Success could support tens of thousands of highly skilled jobs at Rolls-Royce and across the country, whilst creating opportunities for new, internationally competitive manufacturing facilities and factories. 

The initial phases of the proposed investment, which remain subject to a final agreement, are expected to support 3,300 jobs across Rolls-Royce and its UK supply chain partners by the end of 2029.  

To help meet future workforce requirements, Rolls-Royce and the government intend to collaborate on a dedicated jobs and skills development plan. The programme would also extend into academia, providing opportunities for university departments to undertake new research. 

EXPANDING THE UK’S AEROSPACE CAPABILITIES  

Rolls-Royce believes its transformation over the past three years has strengthened its position as a partner to the UK Government, which has a longstanding record of supporting the aerospace sector. 

The company also expects its financial contribution to the narrowbody programme to significantly exceed the government’s investment. 

Rolls-Royce is one of just three businesses globally with the end-to-end capabilities required to design, manufacture, and service an engine of this kind, placing it in a position to pursue the opportunity. 

Should aircraft manufacturers select its proposed narrowbody engine technologies, Rolls-Royce intends to return to the market through a partnership model. 

This would involve identifying UK locations for new, state-of-the-art engine assembly and testing facilities, as well as increasing domestic advanced manufacturing capacity to produce the specialist components required. 

These would include high-pressure turbine blades, which sit at the core of jet engine technology, and advanced composite fan blades. 

The wider supply chain would also play an important role, with new factories potentially required to meet manufacturing demand. Rolls-Royce and the government will work together to maximise opportunities for UK-based suppliers and ensure more of the programme’s economic benefits remain within the country. 

ROLLS-ROYCE’S CONTRIBUTION TO THE UK ECONOMY  

The proposed programme builds on Rolls-Royce’s existing industrial and economic footprint across the UK. 

The company works with communities in all four UK nations and every English region, supporting more than 73,000 jobs. Of these, approximately 23,000 are directly employed by Rolls-Royce across its 37 UK sites. 

Its domestic supply chain comprises more than 1,350 British businesses, with annual spending exceeding £2bn. Through its operations, Rolls-Royce contributes £7.4bn to the UK economy, alongside a further £4.4bn in productivity-related research and development spillover effects. 

International trade is another significant part of its contribution. Around 80 percent of the company’s UK-manufactured output is exported, generating £8bn in annual export value and representing £1 in every £50 of UK goods exports. 

One notable example is the Trent XWB, Rolls-Royce’s most successful large commercial jet engine. Manufactured in Derby, the engine has already delivered more than £30bn in UK export value. 

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Providing resilient, future-ready transport solutions, Alstom is the world’s only pure rail leader. The leadership team at Alstom Americas tells us more about the company’s century of engineering excellence, design innovation, and project management capability.

REALIZE THE POWER OF RAIL

“Manufacturing is going through a very exciting moment. It’s part of national and local conversations across our region; governments understand how vital it is to have a strong manufacturing base to support the economy and they want large, safety-critical goods like trains to be produced domestically, especially those infrastructures that are funded by taxpayers’ money.”

The current state of the manufacturing industry, as outlined by Michael Keroullé, President and CEO of Alstom Americas, is one of rapid development and innovation, making it captivating for companies involved in its leadership.

Alstom is at the helm of this transformation, delivering and maintaining systems that move more than a billion people safely, comfortably, and sustainably every day. Having spent his career in the power and mobility sectors, Keroullé is steadfast in his belief that manufacturing is important but only represents a part of the value creation. 

“When people think of manufacturing, they usually think ‘products’ – widgets where the challenge is figuring out how to create the right number, at the right quality, at the lowest cost to meet the demand – then foreseeing the demand for the next kind of widget, investing in R&D and engineering, and repeating the cycle,” he states. 

“We at Alstom do not define ourselves as a product company, but as a project company that develops fit-for-purpose manufactured goods as one of our outputs.”  

This provides a challenge, but one that is exciting to meet head-on. Today, Alstom builds complex systems designed to meet specific customer needs. Building on this strong engineering expertise, the company is evolving its industrial approach toward greater standardization and platform-based solutions, while retaining the flexibility needed to address specific customer requirements.  

This evolution will help improve delivery times, long-term maintainability, and reduce risk, all important aspects to Alstom’s main customers – transit and passenger rail agencies. 

“We’re working hard with our customers to improve the industry and bring manufacturing close to traditional product businesses: encourage more reuse between projects and more standardization across products,” Keroullé expands. 

This enables Alstom’s manufacturing investments to pay off across a larger number of projects and drive manufacturing excellence, lower supply chain costs, and deliver better value. 

CATALYST FOR A RESILIENT SOCIETY

With the most comprehensive portfolio of solutions for the passenger rail industry, Alstom is the world’s pure rail leader.  

This means it’s the only company of its kind and size in the market that focuses only on rail and that any investment – whether in its manufacturing sites, R&D, or innovation – is designed to have a direct outcome for rail customers. 

Equally, Alstom does everything from building a full range of trains to providing operations, maintenance, signaling, and a suite of digital products for rail. The company has over 80,000 employees and is present in 61 countries globally. 

In North America, Alstom distinguishes itself as the largest private operator of transit systems. This gives the company a unique perspective on what it means to run a system every day, the challenges customers face, and how to solve them. Thus, Alstom is focused on solutions for rail customers across the full value chain. 

“Additionally, we are local, everywhere. This gives us both good proximity to our customers, but also in this geopolitical moment, it means we’ve developed local teams who live in the same environment as our customers and have built local supply chains and manufacturing capacity, allowing us a better position to weather some of the uncertainty,” explains Keroullé.  

COMBINING EXPERTISE WITH IMPACT

Crucial to Alstom is its long-standing tradition of rail manufacturing in the US. Specifically, the company’s factory in Hornell, New York (NY) has been manufacturing and modernizing rolling stock for over 170 years.

“We have an employee who is the fourth generation in his family to work at the site. There is a sense of pride and heritage that comes with being part of this tradition,” insights Marc Bernier, Vice President, Rolling Stock and Components, North America at Alstom Americas.

Alstom can trace a direct line between itself and Pullman – a company known for the luxurious sleeper cars seen in films such as the spy thriller North by Northwest. Pullman was notable for its entrepreneurialism, innovation, and pushing the edge of US manufacturing.  

“We are proud to be part of the future of US rail manufacturing by continuing to invest in places like Hornell and Plattsburgh, NY, and West Mifflin, Pennsylvania. Through our university and labor partners, we continue to foster the next generation of talent and attract them to this industry,” Bernier enthuses. 

Alstom’s capabilities can be directly observed through its recent projects, such as the renewal of North American passenger rail. The company is currently delivering the NexGen Acela to Amtrak, which is operating on the Northeast Corridor between Washington, DC, and Boston, driving significant benefits and ridership. 

“We are immensely proud of this train as this is the latest generation of high-speed technology globally, with improved ride quality and amenities, built in the US,” acclaims Keroullé. 

The program enabled Alstom to bring the latest technology to the US alongside working with suppliers to open manufacturing in the country, allowing the company to collectively meet a record 95 percent local content mark. This means more local jobs and expertise, which Alstom can build across the supply chain, benefiting the lifecycle cost of not only this program, but many others. 

In parallel, the company is supporting the Metropolitan Transportation Authority’s (MTA) commuter rail modernization with new state-of-the-art M-9A commuter vehicles and providing the propulsion system for the next-gen R211 subway fleet.  

This is in addition to delivering NJ Transit’s new 374-car Multilevel III fleet, manufacturing 200 modern multilevel commuter rail cars for Metra, and preparing to build 60 new passenger coaches for the Connecticut Department of Transportation (CTDOT). 

“These are just a few of our projects which reflect the scale of rail modernization underway across North America and our commitment to building the trains and technologies that will move the region for decades to come,” states Keroullé.

KEEPING THE WORLD MOVING

Recognized as a top employer in the US by the Top Employers Institute, Alstom works to ensure a workplace environment that supports its employees’ careers and well-being. 

“We are a global company with employees from over 184 nationalities in a wide range of roles, from early-career assemblers and technicians to managers and engineers, each with different skills, levels of education, and experience. To bridge these different cultures and job descriptions, mutual respect is imperative; that respect starts from the top,” Keroullé affirms. 

Alstom offers comprehensive remuneration programs based on the principles of fairness, equity, and transparency. For the company’s unionized workforce, these packages are negotiated through collective bargaining agreements. No matter the employee or site, Alstom’s compensation conditions and development opportunities are designed to support their health,  
well-being, and futures. 

Each employee is encouraged to partake in specialized programs to grow their high-demand skills, including advanced welding and automation for manufacturing site team members. 

“At Alstom, we want our colleagues to thrive – personally, professionally, and everywhere in between,” asserts Keroullé. 

As the company looks ahead, its priority for 2027 is execution, with an incredible backlog of projects in design and in its North American factories. Alstom’s focus is on completing older projects, such as getting NJ Transit’s Multilevel III trains into revenue service. 

Equally, it wants to start new projects on the right footing in order to deliver with quality, on time, and on budget for customers. To do this, the company is improving its project management, engineering, production, and manufacturing processes. 

“We’ve been foregrounding problem solving and our Single Week Improvement Program to empower our teams on the ground to make things work better and provide them with the resources they need to keep on track,” Keroullé concludes.  

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Mounting demands for power both in Canada and across North America are spurring a once-in-a-generation energy transformation. This is driving organizations to rethink their strategies around power capacity and security, electrification, digital innovation, and infrastructure modernization. Chris Fluit, Senior Vice President and General Manager, Canada, explains how Eaton is helping Canadian businesses build the resilience, reliability, and efficiency needed to navigate these profound changes.

DOUBLING DEMAND

By 2050, Canada’s electricity demand is expected to double.

The list of contributing factors is long. It ranges from widespread industrial and vehicle electrification and the need for critical mineral development to the growth of the advanced manufacturing sector.

It encompasses the scale-up of data centers driven by the rapid adoption of artificial intelligence (AI) and extends to the electrification of everything, from buildings and homes to transportation.

In the face of this pressure, legacy power grids are struggling to keep up. According to the Independent Electricity System Operator (IESO), the province’s industrial demand alone is forecast to rise 58 percent by 2035 as new electric vehicle (EV) and supply chain facilities are constructed. This is the rough equivalent of adding a city the size of Toronto to the grid.

However, the challenges aren’t confined to the utility sector. As demand for reliable power continues to grow, it’s getting harder to secure sufficient capacity for new data center projects.

In Alberta, for instance, the province is prioritizing projects that bring their own power generation to help accommodate this growth.

AGING INFRASTRUCTURE

The challenge is exacerbated as much of Canada’s electricity system nears the end of its useful life.

Modernizing and expanding the system is a monumental task. In fact, the buildout is already running into limits.

Critical equipment, such as transformers and switch gear, is in short supply. Finding skilled talent has also become a core constraint.

For many businesses, this translates into delayed grid connections, a rising risk of blackouts, and mounting costs, particularly as utilities pass their massive capital expenditures down to commercial and industrial ratepayers.

On the flip side, forward-looking companies see opportunities to reduce reliance on the grid, spurring the build-out of microgrids that combine on-site generation, including solar, with batteries and back-up generation.

THE DIGITAL PARADOX

Notably, the trend toward digitalization is both accelerating this power crisis and presenting new solutions.

On the one hand, the adoption of cloud services and Internet of Things (IoT) sensors empowers companies to optimize processes, reduce risk, and enhance compliance.

On the other hand, however, it also shifts their energy footprint and vastly extends their reliance on energy-intensive networking infrastructure.

Similarly, while the collection of unprecedented amounts of data unlocks new business insights, storing that data puts exceptional loads on the very data centers already under pressure to keep pace with the AI transformation.

Digitalization itself may also hold the key that allows companies to reduce their energy reliance. Smart buildings use technologies like IoT sensors and AI algorithms to monitor building occupancy in real time and dynamically adjust heating and cooling requirements.

For its part, digital monitoring of heavy equipment allows companies across sectors to keep their machinery running at peak electrical efficiency by enabling predictive maintenance that reduces power drag.

MAKING WHAT MATTERS WORK

It’s this confluence of power management challenges that the industry is working to address.

“We partner with our customers to solve fast-evolving, complex energy challenges that span the electrical grid, data centers, essential infrastructure, and critical resources,” explains Chris Fluit, Eaton’s Senior Vice President and General Manager, Canada.

Fluit has worked in the electrical industry for over 30 years, 24 of which have been with Eaton.

He began his career as a field engineer, led the sales team in Canada, gained exposure to multiple facets of the business, and became Senior Vice President and General Manager, Canada in April 2024.

It’s this experience he draws on when he discusses Eaton’s legacy in Canada, as well as its vision for the future.

PRIORITIZING LOCAL PRODUCTION

With transformers and switchgear on multi-year backlogs, getting electrical equipment on time can be a deciding factor in a project’s success.

This reality is reshaping how electrical manufacturers approach capacity, supply chains, and customer support, and Eaton’s Made in Canada strategy reflects that shift.

“We strongly believe in local manufacturing as a way to stay closer to our customer base,” asserts Fluit.

“We want our customers to have the ability to walk into our plants and work with local engineers to build custom configurations, from design and manufacturing to packaging and service.”

To deliver on this commitment, the company operates three main manufacturing plants and six satellite manufacturing centers spread across Canada to support rapid manufacturing cycles, two national distribution centers that offer same and next day delivery coast-to-coast, and a network of field engineering services and sales centers across the country. In fact, Eaton, whose roots go back to 1903, has been in Canada for 123 years.

In 2024, the company committed CAD$15 million to expand manufacturing capacity in Canada, doubling its low-voltage manufacturing footprint in Milton, Ontario (ON) to help power the country’s electrified future.

This means the switchboards, switchgear, and panelboards needed to electrify the nation’s transport infrastructure, building systems, and industrial processes are designed and built in Canada, closer to Canadian job sites.

The grand opening celebration for this expansion took place earlier this year and showcased the fully automated steel fabrication system that can support ‘lights out’ automated manufacturing processes.

LOCAL DISTRIBUTION

For many organizations, access to power has become a critical business consideration rather than a utility concern.

Local manufacturing is only one piece of the equation. It also includes a network of distribution partners from coast to coast who provide customers with local access to Eaton’s products, electrical expertise, and project management.

Just some of these partners include Wesco and Westburne, which operate nationally, Vaughan Electrical, which operates in the Greater Toronto Area, and Bartle & Gibson, which operates in Saskatchewan, Alberta, and British Columbia.

REIMAGINING THE GRID

As grid capacity constraints become an increasingly common barrier to growth, many organizations are exploring new approaches to energy resilience and energy independence.

Eaton’s Everything as a Grid framework enables commercial buildings, factories, and data centers to integrate localized distributed energy resources such as on-site solar, microgrids, and battery energy storage systems.

Innovation will play an important role in helping Canada balance growing electricity demand with reliability and resilience goals.

At the Montreal Innovation Center, the company develops these technologies, bringing software, automation, and cybersecurity specialists together under one roof.

In just one real-world example, microgrid technology co-developed with Hydro-Québec is helping facilitate the integration of renewables and storage into local buildings, industry, and the grid.

At the site’s new Experience Center, customers can also gain hands-on training for the digital technologies that are accelerating the energy transition.

“Electrification is a major trend across virtually every sector of our economy. That’s why our solutions span every aspect of electrification, from power generation, transmission, and distribution to the safe and efficient use of energy,” Fluit notes.

FACING FORWARD

Looking toward the future, Eaton expects continued growth driven by expanding mega-projects, record electrical demand, and sustained investment in data centers, advanced manufacturing, and energy transition infrastructure.

Yet, the bigger challenge is preparing for what comes next, including demand that businesses can’t yet see.

That means looking beyond today’s needs: collaborating closely with customers on tailored solutions, anticipating powerful long-term industry trends, and partnering with innovators to help shape what comes next.

“A big focus of our R&D initiatives is to be smarter, more efficient, and more sustainable,” says Fluit.

“To that end, we’re leveraging tools – including AI – that allow us to speed up product development by testing in a virtual environment.”

THE PEOPLE WHO MAKE IT POSSIBLE

All these leading innovations hinge on the role people play.

“To help our people keep pace in a rapidly changing industry, we heavily emphasize education and training,” Fluit stresses.

“Our leadership model, in particular, revolves around equipping people to think big, act boldly, and win together.”

That investment extends to the next generation. Eaton works with regional universities and technical schools across Canada, offering internship and co-op programs that provide students with hands-on experience.

In Québec alone, the company maintains long-term relationships with ÉTS Montréal, Polytechnique Montréal, Université de Sherbrooke, McGill, Université Concordia, Université de Montréal, and others.

Similarly, a collaboration with McMaster University’s Automotive Resource Center (MARC) in Hamilton, ON brings together students and graduate engineers to help drive research into vehicle electrification and advanced power electronics.

GIVING BACK

Part of Eaton’s commitment to working locally can be seen in the impact it has on local communities.

In just one recent example, the company made a significant contribution to Feed Halton, an organization that works to strengthen food security and improve access to nutritious food for the Halton, ON community.

On a global level, the company works closely with Habitat for Humanity International. It also offers a 50 percent match for every dollar employees donate to the United Way.

“Not everyone knows this, but our founder, Joseph Eaton, was one of the founders of the United Way in Cleveland at the turn of the century,” shares Fluit.

“That relationship has continued to this day and is a cornerstone of how we look at giving back to the communities where we live and work,” he concludes.

READY FOR WHAT COMES NEXT

Doubling Canadian infrastructure by 2050 is a daunting prospect. Realizing Canada’s economic and electrification ambitions will require coordinated investment, innovation, and collaboration across the energy ecosystem.

Through its technologies, expertise, and local presence, Eaton is helping customers navigate that transition.

By developing more efficient, sustainable power management solutions, the company aims to equip customers to seamlessly navigate the energy transition, the shift toward digitalization, and the rapid proliferation of electric technologies.

EATON CANADA PARTNER

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A company on a mission to deliver sustainable, like-new remanufacturing solutions for vehicle powertrain and drivetrain components, ATC is positively impacting its customers and the environment. CCO, George Kostopoulos, explains more about what drives the business.

POWERTRAINS REBORN

The automotive industry is navigating its most significant powertrain transition in generations. As internal combustion, hybrid, and battery electric vehicles (BEVs) increasingly coexist in the market, remanufacturers must evolve to support a broader range of technologies than ever before. 

As such, automotive remanufacturer ATC has chosen to be ‘powertrain agnostic’ – in other words, leaving the market to decide which powertrains are most popular while focusing on providing remanufacturing solutions for all types of powertrain technology. 

Today, fundamental remanufacturing disciplines such as inspection, disassembly, cleaning, repair or replacement, reassembly, and validation processes remain consistent across internal combustion engine (ICE), hybrid, and BEV products. What differs are the specialized tools, safety protocols, diagnostics, and technical expertise required for electric vehicle (EV) batteries and electric drive units.  

“Subsequently, ATC has invested in carefully developing each of these capabilities before launching a new remanufactured product,” opens George Kostopoulos, CCO.  

A major challenge the industry faces is the affordability of remanufactured products, with cost challenges presented from every angle – from tariffs and component shortages to supply chain disruptions and unprecedented increase in logistics cost. 

“Despite these challenges, ATC remains a prominent global supplier with decades of experience in remanufacturing,” he prides. 

Indeed, both the company’s original equipment and independent aftermarket (IAM) channels are well positioned to supply solutions that address these challenges for today’s customers.  

LONG-STANDING EXPERIENCE

Founded in 1938 as a remanufacturer of automotive components, ATC now has more than 88 years of industry experience under its belt.  

With more than 2,100 team members working across 21 worldwide locations spanning four continents – North America, South America, Europe, and Asia – the company serves both original equipment manufacturers (OEMs) and IAM customers.  

“Our portfolio includes powertrain and drivetrain products for the full range of propulsion technologies,” Kostopoulos shares.  

For ICE powertrains, this includes engines, transmissions, transfer cases, and rear drive units, while for hybrid powertrains, this includes hybrid transmission, engines, and hybrid electric vehicle (HEV) batteries.  

“For EVs, meanwhile, this spans EV batteries, electric drive units, on-board chargers and inverters,” he insights. 

ATC has maintained strong relationships with automotive OEMs and IAM distributors globally, some spanning more than 80 years.  

“Our Farmington Hills HQ placed ATC at the center of one of the nation’s key automotive ecosystems. Although we relocated the HQ to Michigan, this did not diminish our footprint in Oklahoma City – quite the opposite, in fact, with ATC having grown in the state with one additional factory and two additional warehouses,” Kostopoulos notes. 

Indeed, maintaining a presence in Oklahoma City and close proximity to decision makers has helped the company to secure new business, maintain a strong sourcing network, develop new product launches, and ensure long-term planning.

LEADING REMANUFACTURER

As a leading remanufacturer with years of experience, ATC has remained ahead of the curve by focusing on developing its wider expertise. 

“Rather than focusing on single-product expertise, ours is continuous across all manner of remanufacturing solutions – regardless of the product evolution. Our constant goal has been figuring out how to continually extend the lifecycle of any given product,” Kostopoulos tells us. 

Also, rather than trying to predict which propulsion technology will prevail, ATC’s technology roadmap was developed and executed with the goal of becoming a ‘powertrain agnostic’ company. 

Ultimately, the company has stayed ahead of the curve by being willing to change what and how it remanufactures without changing why it remanufactures. 

In addition to its expertise, ATC’s suite of ongoing projects continues to set it apart from the competition. 

For example, the company launched a factory in Brazil last year – its first site in South America – which was initially focused on cleaning diesel particulate filters (DPF) on commercial vehicles with ATC’s patented cleaning machine technology.  

It has also launched a new torque converter factory in Oklahoma City and will be expanding its portfolio there in the coming years.  

“This factory allows us to increase the value add of the transmissions while offering reman torque converters as a stand-alone product,” he discloses. 

ATC has also completed and launched its EV battery remanufacturing center in Germany, which allows it to provide EV battery remanufacturing solutions to its customers in continental Europe, and it is also launching a process for cleaning passenger car DPFs in the country, building on its success with commercial DPFs. 

Elsewhere in Europe, it is currently launching a new facility in the UK focused on dismantling and discharging EV batteries at the end of their lifecycle. 

“This is critically important since every EV battery will eventually reach the end of its lifecycle,” Kostopoulos explains. 

A NEW IDENTITY

In 2024, ATC underwent a brand identity refresh that reflected its expanded product portfolio and highlighted its continued emphasis on sustainability, technology, and collaboration, while putting the customer at the center regardless of whether their roadmap is ICE, HEV, or BEV. 

“Presenting ourselves as a single, unified brand has allowed our customers to see one ATC, instead of individually acquired companies and locations,” Kostopoulos prides.  

Notably, the company’s global footprint means that a customer can not only reap the benefits of a local operating solution but also a global relationship. 

“For us, collaboration isn’t just a branding opportunity; it’s about identifying how we solve customer problems, which requires an understanding of their challenges – not only today, but in the future,” he reveals. 

In 2026, this approach is reflected in ATC’s work to expand regional EV battery capabilities, broaden its torque-converter and DPF offerings, and work with customers earlier in their planning cycles to align the requisite remanufacturing capacity, technology, and service support with their evolving needs. 

When it comes to sustainability, as a company that proudly reuses and remanufactures components rather than producing new ones, ATC has been prioritizing sustainable solutions long before the term ‘circular economy’ became a part of modern business vocabulary.  

“Our approach to sustainability does not compromise quality – in fact, circularity strengthens our supply chain by decreasing our dependence on new materials,” Kostopoulos asserts. 

In 2025, ATC reported that its remanufactured products had reduced carbon dioxide (CO₂) emissions by an amount equivalent to the CO₂ absorbed by a 29,000-acre forest.  

“This clearly demonstrates how remanufacturing can deliver measurable environmental value while strengthening supply chain resilience,” he reflects. 

GLOBAL PARTNER OF CHOICE

When ATC opened a new electric vehicle battery and powertrain laboratory (EV lab) in Oklahoma City in 2022, it marked the beginning of a global strategy to support customers regardless of the propulsion technology powering their vehicles. 

Following the success of the initial EV lab, the company expanded its EV battery footprint and competencies globally, supplemented by its ability to locally remanufacture EV batteries in the region.  

The company’s strategy today is broader, and the demand for EVs has moved from early pilot toward a broader mix that includes remanufacturing, recertification and conversion, warranty support, storage, logistics, module recovery, and recycling – all of which allow ATC to participate throughout the lifecycle of an EV battery. 

“Today, although ICE remains the dominant powertrain for an indefinite timeframe, demand has evolved since 2022, and EVs add new opportunities that we can support,” Kostopoulos observes. 

While adoption rates vary by market and vehicle platform, the installed base of EVs is growing, creating a steadily expanding need for ATC’s lifecycle solutions.  

Looking ahead,the company’s key priority for the future is to be the global partner of choice for remanufacturing solutions.  

“This means we will continue to support our customers’ needs, and our product portfolio and geographic footprint will continue to be driven by that priority,” he outlines. 

At the same time, ATC will endeavor to share its best practices and transfer technical expertise globally.  

“Meanwhile, our acquisition and investment strategy will continue to focus on filling gaps us on filling gaps for our customers – either in technology or geographic footprint,” Kostopoulos firmly concludes.

ATC PARTNER

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Dr John Bates, CEO of Doxis, explains why better document management and reliable information are essential to unlocking the full potential of artificial intelligence in manufacturing

Why document management matters for manufacturing AI

From predictive maintenance to improved supply chain and demand forecasting, the USD$16 trillion global manufacturing sector is increasingly interested in artificial intelligence (AI).

However, another important application is managing the large volumes of document-heavy workflows that keep the industry moving, even though much of this content is now electronic rather than paper-based.

Every product generates a trail of quotations, purchase orders, engineering drawings, quality records, invoices, shipping documents, maintenance histories, and compliance records.

When these are scattered across disconnected systems and handled manually, the result is slower order processing, delayed decisions, duplicated work, and employees spending time searching for information instead of acting on it.

Long before AI, leading manufacturers were using earlier generations of advanced technology to streamline these processes.

What is interesting is that manufacturers are now recognising that the efficient routing of data and clarity provided by enterprise systems, such as enterprise content management (ECM), offer an ideal foundation for AI success.

SEW-EURODRIVE: Demonstrating the value of enterprise content management

One organisation that has tackled both document optimisation and AI implementation is SEW-EURODRIVE, a large, privately owned German multinational specialising in industrial drive technology and automation.

Based in southwestern Germany, SEW-EURODRIVE employs nearly 23,000 people worldwide and generates more than €4 billion in annual sales.

It manufactures motors, gear units, electronic drives, and automation systems that move and control machinery across manufacturing, warehousing, and logistics, often as essential components in other companies’ production and supply chain operations.

SEW-EURODRIVE provides a compelling example because Forrester Consulting published an in-depth study examining the impact of using ECM to streamline its back-office operations.

The findings were striking. Forrester calculated a 336 percent return on investment (ROI) over three years, equivalent to more than €17 million in value.

Equally significant in today’s AI conversation was SEW-EURODRIVE’s report to Forrester of time savings of up to 90 percent in certain document-heavy processes.

Technical drawings, assembly instructions, order records, and other documents became easier to find and share across locations.

Manual processing was reduced in some intensive workflows, freeing employees to focus on higher-value activities.

Legacy costs also fell as SEW-EURODRIVE consolidated older systems and avoided some additional staffing costs, resulting in estimated savings of €640,000.

How generative AI is transforming manufacturing workflows

When SEW-EURODRIVE first adopted ECM, generative AI and large language models (LLMs) were not yet central to the business agenda.

Since then, the company has begun using AI capabilities embedded within its ECM platform to gain deeper insights and transform sales processes.

The aim is to help the business make the most of customer relationships that often span decades by improving the quality of information available to teams and making it instantly accessible.

By unlocking previously inaccessible data, the technology also creates opportunities to automate processes such as handling supplier declarations and payment notifications.

As the organisation’s Group Manager of Archiving and Documenting Services explains:

“The search is ridiculously fast [and can search] 50 to 60 years of history in milliseconds.”

Generative AI, he adds, “delivers a level of precision and efficiency that simply wasn’t possible before.”

Why data quality is essential to AI accuracy

This gets to the heart of the AI debate in manufacturing: how to deliver the right information to the right people quickly enough to help businesses operate efficiently.

It also underlines the importance of accurate information retrieval.

If SEW-EURODRIVE’s sales team provides long-standing customers with faulty or outdated information, it hinders rather than strengthens those relationships.

In other words, effective AI depends on excellent document intelligence, providing the reliable information needed to guide its outputs.

As this manufacturer’s experience demonstrates, ECM can provide that foundation.

Gartner argues that successful generative AI deployments are “best empowered” by strong document management strategies, warning that unreliable grounding data can lead to hallucinations or incomplete responses.

Bain and Company agrees, emphasising that “data remains the biggest challenge and the biggest opportunity” in enterprise AI.

IBM makes a similar point about the importance of data quality in AI.

Building the foundations for AI success in manufacturing

The question for manufacturers is whether the road to successful AI adoption in the back office begins with AI-enabled enterprise content management.

As organisations seek to automate the document-based processes that underpin their operations, the importance of accessible, accurate, and well-managed information is becoming increasingly clear.

For manufacturers looking to generate measurable returns from AI investment, document optimisation may be the most effective place to start.

Dr John Bates is CEO of Doxis, a provider of AI-powered enterprise content management and intelligent document automation technology.

The post Opinion: Why AI ROI in Manufacturing Starts with Document Optimisation appeared first on Manufacturing Outlook.

Honeywell Aerospace has announced plans for a new USD$500 million manufacturing facility in Arizona, integrating robotics, digital twins and automated inspection to strengthen production capacity, improve supply chain resilience and meet growing demand across commercial aviation and defence.

Honeywell Aerospace Expands US Manufacturing Capacity

Honeywell Aerospace has announced plans to invest USD$500 million in a new advanced manufacturing facility in Tempe, Arizona, as it expands production capacity to support growing commercial aviation and defence demand.

The 300,000-square-foot facility, located on the company’s existing Tempe campus near its global headquarters, is scheduled to open in late 2028.

The investment will support current and next-generation aerospace technologies, including major commercial programmes and high-priority defence projects.

Jim Currier, President and CEO of Honeywell Aerospace, said the expansion reflects increasing demand across its core markets.

“Demand for technology from Honeywell Aerospace continues to accelerate across both commercial and defense markets, and this major investment ensures we can continue delivering for our customers while unlocking long-term growth for our shareholders,” said Currier.

“This is an example of how our recent spin into an independent, publicly-traded Honeywell Aerospace allows us to make decisions and investments that support our growth and the future of aviation and defense.”

Robotics and Digital Twins to Drive Production

The new facility will incorporate an integrated digital production system designed to support more advanced and flexible manufacturing operations.

Its capabilities will include modular robotics, automated inspection, digital twins and an end-to-end digital thread connecting production processes.

These technologies will form part of Honeywell Aerospace’s strategy to expand manufacturing capacity while supporting the development and production of next-generation aviation systems.

The facility will also introduce additional internal complex machining capabilities, addressing an area of the aerospace supply base that the company identifies as currently constrained.

By bringing more machining operations in-house, Honeywell Aerospace aims to strengthen supply chain resilience and establish a more vertically integrated production system.

Supporting Next-Generation Aerospace Technologies

The expansion will support production of Honeywell Aerospace’s next-generation technologies, including its Assure advanced actuation systems and Attune vapour cycle cooling subsystems.

It will also provide additional manufacturing capacity for existing customer programmes and support USD$15 billion in new Control Systems programme wins.

Defence manufacturing will be another priority, with the facility providing capacity to support production of critical technologies covered by the supplier framework agreement Honeywell Aerospace signed with the US Department of War in March 2026.

The investment is intended to strengthen the company’s ability to meet customer requirements across both commercial and defence markets as demand increases.

Creating 600 Manufacturing Jobs

Honeywell Aerospace expects the new facility to create approximately 600 jobs over time, expanding its engineering capabilities and skilled manufacturing workforce.

Construction is also expected to support more than 1,000 local jobs.

The investment builds on the company’s established manufacturing and engineering presence in Arizona.

“Arizona has been at the heart of our innovation and manufacturing operations for decades,” Currier said.

“Expanding on our existing Tempe campus with this state-of-the-art new facility reinforces our commitment to this great state, our employees and the Arizona workforce, as well as the customers around the world who depend on our technology every day.”

Strengthening Aerospace Manufacturing Resilience

The Tempe development forms part of Honeywell Aerospace’s efforts to increase internal production capacity and reduce reliance on constrained areas of its supplier network.

Combining complex machining with digital manufacturing technologies will enable the company to support a broader range of current and next-generation aerospace products within a more vertically integrated production environment.

Headquartered in Phoenix, Honeywell Aerospace employs more than 36,000 people globally and serves over 10,000 customers across commercial aviation, defence and space markets.

The post Honeywell Aerospace Invests USD$500 Million in Advanced Manufacturing Facility in Arizona appeared first on Manufacturing Outlook.

Körber and Microsoft are combining pharmaceutical expertise and AI technology to streamline recipe digitisation, improve operational efficiency, and support compliance in regulated manufacturing environments.

AI FOR REGULATED PHARMACEUTICAL MANUFACTURING

Körber is expanding its AI platform for pharmaceutical manufacturing with K.AI, an AI-native software solution built on Microsoft Azure. Designed to help manufacturers digitise, search, and update complex drug recipes, the solution aims to improve operational efficiency while meeting stringent pharmaceutical regulatory requirements.

Announced in Cologne, Germany, on October 22nd, 2026, K.AI combines Körber’s expertise in pharmaceutical operations and software with Microsoft’s cloud and AI technologies. The solution addresses a key challenge in pharmaceutical production: creating, reviewing, and updating large volumes of highly precise recipes, with every change requiring seamless documentation.

Generic generative AI models alone are insufficient for these applications because outputs must be accurate, traceable, and fact-based. K.AI was developed specifically for digital manufacturing processes where reliability and regulatory compliance are essential.

PHARMAGUARDRAILS TECHNOLOGY

The solution combines Microsoft Azure, Azure OpenAI Service, and Azure AI Foundry with Körber’s PharmaGuardrails technology. This provides a scalable AI foundation alongside specialised pharmaceutical governance, traceability, and validation mechanisms.

PharmaGuardrails checks AI-generated responses using a specialised algorithm, helping to virtually eliminate hallucinations and incorrect answers. Results can then be reviewed and validated in a traceable way, supporting generative AI use in regulated manufacturing.

Specialists can search for and update recipes using natural language, while humans retain review and approval. This approach aims to make complex information more accessible without removing the oversight required in pharmaceutical production.

“In regulated manufacturing environments where patient safety is directly affected, ‘almost right’ is not good enough. People need to be able to access high-quality, reliable results,” says Shaun Tyler, Vice President Artificial Intelligence, Software, at Körber Business Area Pharma.

“Jointly with Microsoft, we are harnessing the potential of generative AI and safeguarding it with our PharmaGuardrails technology to deliver trusted results at scale – while keeping humans in control.”

Initial pilot projects indicate that recipes can be digitised around 30 percent faster, while the proportion of manual steps can be reduced by up to 40 percent.

COMBINING TECHNOLOGY AND PHARMA EXPERTISE

Körber and Microsoft have established a dedicated AI innovation partnership in response to the growing complexity of industrial pharmaceutical manufacturing and automation.

Körber contributes its extensive knowledge of pharmaceutical operations and regulatory requirements, while Microsoft provides AI and cloud infrastructure backed by a comprehensive security architecture.

“Our collaboration brings together the strengths of both companies: Körber contributes extensive expertise in pharmaceutical operations and regulatory requirements, while Microsoft provides its high-performance AI and cloud platform with a comprehensive security architecture,” says Agnes Heftberger, Corporate Vice President & CEO, Microsoft Germany & Austria.

The partnership aims to deliver responsibly developed, scalable applications for strictly regulated operations. Beyond digitising existing processes, the companies intend to create a flexible knowledge base for relevant production areas, using AI to support the search and adaptation of structured operational data.

Ultimately, the initiative aims to empower decision-makers with reliable information to support better data-driven decisions while maintaining the accuracy, traceability, and human oversight pharmaceutical manufacturing demands.

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Hitachi has announced plans to launch Hitachi Digital in April 2027, combining GlobalLogic and Hitachi Digital Services into a single global business. Led by CEO and Chairman Anand Birje, the new company will bring together approximately 35,000 professionals across 27 countries to help organisations integrate artificial intelligence (AI), cloud technologies and digital engineering into their operations.

Hitachi Unites GlobalLogic and Digital Services Under One Brand

Hitachi has unveiled plans to establish Hitachi Digital, a new global digital services company designed to accelerate enterprise transformation through the integration of cloud computing, data and AI.

Scheduled to begin operations on 1 April 2027, the company will combine Hitachi’s US subsidiaries GlobalLogic and Hitachi Digital Services under a single brand, following an integration plan announced in January 2026.

Headquartered in Santa Clara, California, Hitachi Digital will employ approximately 35,000 professionals across 27 countries and serve more than 880 active clients.

The new business will combine GlobalLogic’s software and product engineering capabilities with Hitachi Digital Services’ expertise in enterprise systems, cloud infrastructure and operational technology.

Hitachi says the integration will allow customers to access services covering the full digital transformation lifecycle, from developing AI-enabled products to modernising existing enterprise systems and managing their ongoing operations.

Anand Birje, CEO and Chairman of Hitachi Digital, said: “Our clients need one partner who understands how an industry works, maintains deep technology ecosystem relationships, while engineering what’s new, modernizing what’s underneath, and keeping it all running across the enterprise.”

“Hitachi Digital brings digital engineering and operations together as one company, at global scale, with the industrial depth of Hitachi behind us. We can be our clients’ one trusted partner from strategy through operations, engineering what the world depends on.”

Expanding AI, Cloud and Digital Transformation Services

Hitachi Digital will operate across several technology areas, including physical AI, data intelligence, cloud computing, site reliability engineering and enterprise applications.

Its services will target industries with complex operational requirements, including manufacturing, energy, mobility, financial services, healthcare, telecommunications and retail.

The company will draw on Hitachi’s industrial expertise to develop solutions connecting digital technologies with physical infrastructure.

This includes expanding the use of physical AI, which applies AI capabilities to machinery, robotics and other systems operating in real-world environments.

Hitachi Digital will also support the development of HMAX, Hitachi’s suite of AI-powered solutions for social infrastructure.

The business intends to strengthen its capabilities through investment in AI, data and cloud specialists, alongside technology partnerships and potential acquisitions.

Forward-Deployed Engineers to Support Enterprise AI Adoption

A central element of Hitachi Digital’s strategy will be its use of forward-deployed engineers (FDEs).

These teams of AI specialists, data scientists and engineers will work directly within customers’ operational environments to develop and implement digital solutions.

Rather than focusing exclusively on technology development, the approach is designed to address the practical challenges of deploying AI across complex enterprise systems and industrial operations.

Engineers will work alongside customers in locations such as manufacturing plants, transport depots and energy substations, incorporating operational knowledge into AI systems.

Hitachi plans to employ and develop 5,000 FDEs in Japan alone as part of its wider digital transformation strategy.

The company will also use its own businesses, including Hitachi Energy and Hitachi Rail, to develop and test technologies before extending them to external customers.

Hitachi describes this as its ‘customer zero’ approach, using experience gained from internal deployments to improve solutions for other organisations.

Hitachi Targets Growth in Physical AI and Industrial Technology

The integration is intended to strengthen Hitachi’s position in the growing market for enterprise AI and industrial digital transformation.

Hitachi Digital’s synergy revenue with other Hitachi Group businesses increased by 46 per cent year-on-year during the first half of the financial year, according to the company.

Jun Abe, Executive Vice President and Head of the Digital Systems and Services Sector at Hitachi, said: “With the launch of Hitachi Digital, Hitachi will evolve into a global digital services company capable of providing end-to-end solutions ranging from enterprise AI to physical AI.”

“By uniting GlobalLogic’s digital engineering with Hitachi Digital Services’ enterprise and operational expertise, and leveraging the FDE Team as a driving force, together with Hitachi’s OT and domain knowledge in social infrastructure, we will work alongside clients throughout their business transformation and help maximize value creation.”

The new organisation will also build on existing industry recognition for both businesses.

ISG Research has recognised their capabilities across intelligent robotics and physical AI services, digital engineering and generative AI services.

Gowtham Sampath, Assistant Director and Principal Analyst at ISG Research, said the integration combines Hitachi’s industrial expertise with enterprise AI capabilities.

Hitachi Digital to Begin Operations in April 2027

Hitachi Digital will operate as a wholly owned subsidiary of Hitachi, with Birje serving as CEO and Chairman.

As part of the restructuring, the existing Hitachi Digital LLC will be renamed Hitachi Digital Holding LLC, overseeing business management for the Digital Engineering and AI Solutions Business Unit.

The newly formed Hitachi Digital Inc. will become the operating company delivering services to customers worldwide.

The launch forms part of Hitachi’s wider Lumada 3.0 strategy, which focuses on combining digital technologies, operational expertise and industrial infrastructure.

By consolidating its digital engineering and enterprise services operations, Hitachi aims to provide organisations with a single technology partner capable of supporting transformation projects from initial development through to long-term operations.

The new company is scheduled to commence legal operations on 1 April 2027.

The post Hitachi : New Global Digital Powerhouse to Unite 35,000 AI and Technology Experts appeared first on Manufacturing Outlook.

TÜV SÜD and Accenture are collaborating to accelerate the certification of artificial intelligence (AI)-powered robots and industrial automation systems using NVIDIA technologies. Their new Physical AI Safety Suite concept could help manufacturers deploy autonomous equipment more quickly, improve workplace safety and bring production facilities online up to 30 per cent sooner.

TÜV SÜD and Accenture Target Faster Factory Automation

TÜV SÜD and Accenture have announced a collaboration to simplify the safety assessment and certification of industrial automation systems, potentially removing a significant barrier to the adoption of physical AI in manufacturing.

Unveiled at NVIDIA GTC Berlin 2026, the companies’ proposed Physical AI Safety Suite combines digital twins, AI agents and simulation technologies to help manufacturers assess automated equipment before deployment.

The approach is designed to accelerate the introduction of autonomous mobile robots (AMRs) and other intelligent systems into factories and warehouses, including environments where robots operate alongside human workers.

TÜV SÜD estimates that partially digitising the assessment and certification preparation process could enable production facilities to come online up to 30 per cent sooner.

The collaboration also aims to reduce the need for physical inspections and costly modifications by identifying potential safety issues earlier in the engineering process.

Digital Twins Could Reduce Industrial Certification Delays

Industrial automation systems must comply with established safety standards before deployment, particularly where autonomous equipment operates in shared working environments.

These include ISO 3691-4, which specifies safety requirements for driverless industrial trucks and associated systems, including AMRs.

However, the process of coordinating safety assessments, validating equipment and obtaining certification can delay implementation.

According to TÜV SÜD, these activities can take several weeks at a medium-sized production facility.

The Physical AI Safety Suite seeks to address these challenges by using digital simulations to assess industrial layouts, robotic operations and potential hazards before physical equipment is installed.

Patrick Vollmer, CEO and Chairman of the Board at TÜV SÜD AG, said: “Physical AI enables robotic systems to become increasingly adaptive while also paving the way for an independent, evidence-based digital certification process.”

“Through our Physical AI Safety Suite, which leverages simulation-generated evidence, we can support compliance-readiness much earlier in the engineering lifecycle without compromising the rigor safety standards require.”

NVIDIA Technologies Support Three-Layer Safety Assessment

The proposed system assesses industrial automation across three connected layers, with TÜV SÜD providing independent assessment and assurance while retaining responsibility for certification.

The first layer examines factory and warehouse layouts using NVIDIA Omniverse libraries, the NVIDIA Cosmos world model platform and NVIDIA Isaac Sim.

These technologies allow manufacturers to simulate robot routes, operating zones, clearances and areas shared with employees before equipment is deployed.

The second layer focuses on robotic fleets, evaluating how multiple autonomous machines interact with each other, workers and their surroundings.

Using NVIDIA Halos safety technologies and the NVIDIA IGX Thor edge AI platform, the system is designed to identify potential hazards that may fall outside an individual robot’s field of vision.

AI agents can also use information from facility-mounted cameras to support earlier responses to potentially dangerous situations.

The third layer assesses individual robots under specific operating conditions, including different loads, speeds, floor surfaces and lighting.

Simulation enables manufacturers to test a wider range of scenarios than would be practical through physical testing alone, potentially identifying design improvements before prototypes are built.

Physical AI Could Improve Manufacturing Productivity

The collaboration reflects efforts to accelerate industrial automation while maintaining safety and compliance standards.

Sarat Maitin, Supply Chain and Engineering Lead for Accenture in Central and Eastern Europe, said: “Too often, companies test automation concepts against industry standards after the equipment, layouts and workflows have already been established.”

“The Physical AI Safety Suite brings these steps forward to when companies can still avoid safety incidents and costly rework.”

The post TÜV SÜD and Accenture Partner to Accelerate Industrial AI Certification Using NVIDIA Technology appeared first on Manufacturing Outlook.

Industrial companies are underestimating their exposure to critical mineral shortages, according to new research from Boston Consulting Group (BCG). The report warns that overlooked mineral dependencies, limited supply chain visibility and underutilised public funding could leave manufacturers vulnerable to production disruptions through 2040.

Critical Mineral Demand Could Outstrip Global Supply

Industrial companies face growing risks from critical mineral shortages, with demand for key materials potentially exceeding forecast supply by as much as 150 per cent through 2040, according to new analysis from Boston Consulting Group (BCG).

The report, Why Critical Mineral Shortages Are a CEO Issue, identifies three major blind spots preventing businesses from accurately assessing their exposure to supply disruptions.

BCG’s modelling projects demand for materials including rare earths, graphite, copper and lithium at approximately 120 to 250 per cent of forecast supply through 2040.

The consultancy warns that conventional procurement risk assessments often overlook strategically important minerals because their relatively low purchasing costs conceal their significance to industrial production.

Tycho Möncks, Managing Director and Partner at BCG and co-author of the report, said: “Most industrials track exposure through spend and direct supplier data, and the minerals that can stop a production line are often the ones they spend almost nothing on.”

“The question for CEOs and boards is not whether their company is exposed. It is. The question is whether they intend to live with that exposure or turn it into an advantage.”

Small Mineral Markets Create Major Supply Chain Risks

BCG highlights the threat posed by what it calls ‘mosquito minerals’ – materials traded in relatively small markets but essential to high-value industrial products.

Gallium provides a particularly striking example. Its global market is valued at less than USD$350 million annually, with production of approximately 900 tonnes, yet BCG estimates that around USD$3.5 trillion worth of finished products depend on it.

Similarly, the global upstream arsenic market is valued at approximately USD$50 million, while a single producer supplies around 60 per cent of the ultra-high-purity material used in telecommunications infrastructure, data centre optics, radar systems and defence electronics.

The report also highlights the vulnerability of byproduct minerals, including gallium, germanium and arsenic.

Because these materials are recovered during the production of other metals, their availability depends heavily on the economics and output of the primary mining operation.

Consequently, higher prices for a critical byproduct may not necessarily stimulate additional production, limiting the ability of conventional market mechanisms to resolve shortages.

Supply Chain Exposure Extends Beyond Direct Suppliers

Another major concern is the limited visibility companies have over mineral dependencies beyond their immediate suppliers.

Critical minerals are frequently embedded in components such as motors, magnets, sensors, lasers and power modules, meaning manufacturers may depend on materials they never purchase directly.

BCG also identifies risks within the equipment and industrial processes used to manufacture finished products.

For example, aerospace components and engine parts are commonly machined using cutting tools containing tungsten carbide and cobalt.

A shortage of either material could disrupt production even where the manufacturer has no direct purchasing relationship with the mineral supplier.

The report further warns that concentrating exclusively on mining locations can obscure risks associated with mineral processing and asset ownership.

Changing suppliers may therefore provide little additional resilience if alternative sources remain dependent on the same processing facilities or corporate ownership structures.

USD$65 Billion in Public Funding Remains Underutilised

Beyond operational disruption, BCG argues that poor visibility over mineral dependencies is preventing industrial companies from accessing government-backed investment programmes.

According to figures cited from the International Energy Agency, public finance commitments for critical minerals in advanced economies reached approximately USD$65 billion in 2025, more than four times the level recorded in 2023.

However, BCG’s review of government-backed investment vehicles found that some countries had deployed less than 10 per cent of allocated capital, while others had not deployed any.

Access to these programmes frequently depends on companies making credible offtake commitments, which can be difficult without a detailed understanding of their mineral requirements and supply chain exposure.

Karthik Valluru, Managing Director and Senior Partner at BCG and co-author of the report, said: “These blind spots have a cost beyond risk. The money is there, but it comes with offtake requirements, and a company cannot make a credible commitment without knowing its own exposure.”

“Mapping that exposure properly is where the opportunity starts.”

Although the funding programmes carry conditions, including reporting and localisation requirements, BCG believes they could help companies secure strategic mineral supplies.

Critical Minerals Become a Boardroom Priority

BCG argues that addressing these risks requires greater executive involvement in mineral sourcing strategies, extending beyond conventional procurement and supplier management.

The consultancy found that industrial companies and trading businesses which had successfully accessed public capital were often led through the process by their CEOs and executive teams.

The findings highlight the importance of processing capacity, byproduct recovery and long-term offtake agreements in meeting industrial demand.

For manufacturers and procurement leaders, they reinforce the need to map mineral dependencies across multiple supplier tiers, including the materials embedded in components and production equipment.

As demand for strategically important minerals increases, BCG warns that businesses unable to identify their exposure risk overlooking both potential supply disruptions and opportunities to secure future access to critical resources.

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New SAP research reveals UK businesses are increasing AI investment and anticipating stronger returns, but data, governance, and workforce readiness remain critical to scaling value.

INVESTING FOR GREATER AI RETURNS

UK businesses are increasing their investment in artificial intelligence (AI), with the average organisation spending £20.6 million on the technology in 2026, a 27 percent increase on 2025, according to new research from SAP.

The second Value of AI in the UK report, produced in partnership with Oxford Economics, finds that businesses expect average returns on AI investment to rise from 22 percent in 2026 to 39 percent within two years. Investment is also expected to increase by a further 45 percent over the same period.

However, translating this growing commitment into sustainable business value remains a challenge. While AI is currently supporting 31 percent of tasks in the average UK business, this figure is expected to reach 50 percent by 2028.

“UK businesses are at a turning point with AI. Organisations are increasing their investments and expecting more in return, but now the focus needs to be on turning that ambition into scalable business value,” says Leila Romane, Managing Director, SAP UK & Ireland.

Romane emphasises the need to move beyond isolated pilots, build strong data and governance foundations, and put people at the centre of AI transformation to drive productivity and competitiveness.

BUILDING STRONGER FOUNDATIONS

Despite growing investment, only 11 percent of UK businesses are taking a strategic, holistic approach to AI investment, up from seven percent in 2025. Meanwhile, 41 percent describe their approach as piecemeal, while a further 40 percent prioritise AI investment at departmental level.

Data quality and availability remain significant barriers, with 70 percent of businesses reporting that these issues prevent them from extracting greater value from AI. More than two-thirds (67 percent) identify integrated data systems as the most impactful enabler of AI readiness.

Governance is another pressing concern as organisations accelerate their adoption of agentic AI. Seven in ten UK businesses are already piloting agent-based use cases, with expected average financial returns from agentic AI rising from £2.7 million in 2025 to £12.6 million over the next two years.

However, 49 percent say AI agents are being deployed faster than they can be standardised and governed. Just nine percent consider their governance skills and expertise fully ready, while 61 percent are still developing the formal processes and oversight required to govern AI effectively.

“Good governance is not a brake on AI adoption – it’s actually the opposite,” says Naomi Weir, Technology and Innovation Director, CBI.

Weir highlights how effective governance builds confidence among businesses, employees, and customers, helping organisations establish the trust needed to scale responsible AI adoption.

PUTTING PEOPLE AT THE CENTRE

Alongside data and governance, workforce readiness will be essential to maximising AI’s potential. While 83 percent of UK businesses are already upskilling or reskilling employees to work alongside the technology, 79 percent agree that realising its value requires workforce transformation beyond technical training.

Furthermore, 67 percent say soft skills are becoming part of core job requirements. As AI takes on more routine tasks, employees can focus on work requiring human judgement, creativity, and strategic thinking.

Mitie provides an example of how targeted AI deployment can improve everyday experiences while creating capacity for more complex work. In three months, the organisation’s AI assistant handled more than 29,000 HR interactions and helped reduce calls to People Support by 36 percent.

“What makes AI exciting is the speed at which a focused investment can improve an everyday experience for thousands of people,” says Claire Meadows, People Transformation Director, Mitie.

Meadows explains that the technology lets colleagues access guidance when needed, freeing specialists to focus on work that depends on human judgement. The results have also strengthened Mitie’s confidence in AI’s potential to deliver meaningful improvements at scale.

Ultimately, SAP’s research points to a clear priority for UK businesses: converting growing AI investment into lasting value will require more than technological adoption alone. Integrated data, effective governance, and a workforce equipped to collaborate with AI will be central to turning ambition into measurable business outcomes.

Read the full report: The Value of AI in the UK 2026

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