The majority of manufacturers should try and forget everything they’ve ever read about the likes of digital twins, multi-agent AI and cyber-physical systems. These technology concepts are cloud cuckoo land when compared to real-world manufacturing and do nothing more than distract from the cold, hard realities of running a factory.
UK manufacturers have faced challenges for decades. Those I speak to have learned, some through bitter experience, to ignore the jargon and focus on technologies that deliver tangible value quickly. I am hoping that 2026 will be the year of smart factory pragmatism to pursue and drive UK manufacturing productivity at pace.
Reshoring and rising demand to create opportunities and capacity challenges
The long-term impact of uncertainty, rising costs, labour constraints and scarred supply chains, combined with ongoing reshoring, will create a capacity challenge in 2026. Despite strong demand from sectors such as aerospace, defence and pharmaceuticals, many manufacturers are reluctant to invest in additional people, machinery and space to meet it without a compelling return on investment.
Some manufacturers will struggle to take on extra work without incurring extensive overtime bills, but it will also create opportunities for those with the agility to scale production with existing assets, streamlined processes and a holistic view of their operations.
Productivity race will intensify as skilled labour shortages and employment costs bite
Manufacturers’ prioritisation of efficiency over expansion will ignite a productivity race centred on recruiting, retaining and maximising the value of skilled machine operators.
A shortage of skilled machinists means that manufacturers must upskill their existing staff or invest in technology to improve processes. Those with endemic overtime bills or capacity constraints will invest proactively in automation, robotics and support staff to eliminate non-value-adding tasks that suck time from their skilled machinists.
Smart factory focus will shift from hype to hard numbers
Manufacturers will turn their attention from pipe dream technologies and smart factory rubbish to proven and more pragmatic tools that can deliver rapid value on the factory floor in 2026. The industry won’t be seduced by technologies that promise the world but lack substance, and will only approve spending that can provide a proven, measurable return on investment.
This new age of industrial pragmatism will build on proven continuous improvement systems, accurate operational data and an understanding that the starting point for technology is not the glittering lure, but a clear, well-defined problem that needs to be addressed.
AI will become the trusted advisor in the smart factory
As more people who have spent their entire lives using the internet and smart devices move into management positions, many more manufacturers will use Generative AI as their smart factory adviser in 2026.
AI is becoming the go-to source for smart factory insights and manufacturing best practices, filling the gap between recognising operational problems and identifying the best practices and products to improve productivity, efficiency and sustainability. AI can provide valuable answers if you are asking the right, data-informed questions.
End of the smart factory maker movement
The smart factory maker movement, where manufacturers develop their own AI or Industrial IoT applications in-house, will end in 2026. These initiatives frequently fail due to the surprising complexity of the core technologies and challenges with adoption, and there is growing recognition that the time required to develop and maintain self-built technologies is a false economy compared to industry-standard tools.
Chris Iveson’s predictions draw on his work at FourJaw, whose plug-and-play machine monitoring technology is used by over 160 manufacturers worldwide to enhance productivity, sustainability and profitability, and his previous experience commercialising manufacturing technologies developed at the University of Sheffield Advanced Manufacturing Research Centre.
