It is undeniable 2025 was a year of tumult for the manufacturing sector. S&P Global’s Canada Manufacturing Purchasing Managers’ Index, which monitors the health of global economies, showed a modest expansion of the sector in January 2025. Production levels were rising and, even in the face of tariffs and the upcoming inauguration of President Donald Trump, the index had remained above the critical 50.0 mark for five consecutive months.

What followed was 11 months of contraction, with the index remaining below that neutral indicator for the rest of 2025, only rising above 50.0 in January 2026. Companies grappled with lower exports to the U.S., an air of uncertainty and rising business costs.

But, as it always does, the sector persevered, adapted and moved forward, and now we stand on the precipice of a critical year. To prepare, Manufacturing AUTOMATION brought together a panel of experts to provide their insights on the largest trends facing the Canadian manufacturing sector this year.

The Experts

Joris Myny (top left) is senior vice president of Siemens’ digital industries business in Canada. He is responsible for the sales and marketing, implementation and service of Siemens’ automation technology in the manufacturing and process industries.

Maggie Slowik (top right) is the global industry director, manufacturing for IFS. She bridges the execution gap for industrial AI and cloud solutions and advises on global trends for heavy asset industries.

Ramtin Attar (bottom left) is the chief executive officer of Promise Robotics, a company that aims to enable the building industry to harness automation through the use of their robotic and AI solutions. He founded the company in 2020 after 13 years at Autodesk.

Hugo Lafontaine (bottom right) is vice president of industrial automation for Schneider Electric Canada. His oversight includes a wide range of hardware and software solutions, with a mandate to help Canadian manufacturers on their Industry 4.0 integration journey.

Scaling AI integration

When asked what the most significant trend of the year would be for manufacturers, the experts were unanimous: AI. Specifically, they identified the need for Canadian manufacturers to move beyond proof-of-concept projects into scaling, cross-functional implementations.

“It’s no longer just about siloed projects anymore,” Slowik said. “It’s about getting that scale buy-in and really scaling fast with AI. It’s about bridging this execution gap that we’re seeing right now.”

This urgency for implementation was a common refrain from the experts, with Lafontaine saying the wait-and-see approach employed by some manufacturers leads to them proof-of-concepting themselves to death. “I still see a lot of companies are saying they’ve done it but still don’t know how to scale [past the proof of concept],” he said. “I think our challenge is moving past early adoption and scaling what we’ve proven works.”

The conversation did not simply focus on implementation, but ensuring companies have the ability to scale these new projects or those already in place. It is only through this scaling that companies will secure the ROI necessary to advance their business and inspire the rest of the manufacturing ecosystem to further adapt AI.

Attar emphasized the importance of tailored, vertical AI projects that are domain specific, focusing on both the individuality of the company and effective deployment across operational sector you are experiencing friction in.

“Deployment is very important,” he said. “You could have the best software, but if you’ve never learned how to actually scale that part of this, you’re not going to be successful.”

So if the experts all agree scaling AI is a must, what is holding these companies back? The panel members rejected the generic, oft-repeated concept of slow willingness to adopt by Canadian business owners, with Myny offering a specific roadblock: cybersecurity.

“One thing I notice is for solutions that require machines to be constantly connected to the cloud, there is a reluctance to adopt,” he said. “This is for good reasons, including reliability and cybersecurity. For this reason, we see that manufacturers want their operations to run even disconnected from the cloud.”

To facilitate this requirement, Myny pointed to solutions such as edge computing and digital twins promoting AI native design — manufacturing solutions aiming not to tack AI on as an afterthought, but are instead conceived and developed with AI in mind.

Slowik called this concept “the invisible revolution” and said it would be integral to the continued integration of AI as we move forward in 2026. “For IFS as a company, we are very much behind driving embedded AI capabilities, focusing on a use case by use case approach,” she said. “AI should, in an ideal case scenario, be embedded in your technology and silently work away, augmenting the work of users without them necessarily knowing that it is happening.”

Slowik additionally highlighted the importance of agentic AI as an accessible entry point for manufacturers, allowing them to easily configure and program AI agents for the business processes where it is most required, using simplified human language rather than complex code.

Tariff talk

Despite AI remaining a topic of conversation throughout the panel discussion, the experts agreed it was not the only area of concern for manufacturers.

The conversation surrounding trade, the continued threat of tariffs and the upcoming CUSMA negotiations was a significant point of concern. The panel agreed Canada was in a better position than this time last year in regards to trade exposure to the U.S., but emphasized that the next 12 months would still be critical as the public and private sector seek other investment opportunities and global business partners.

“Canada is one of the most trade exposed manufacturing economies in the G7, no questions asked,” Lafontaine said. “The impact of this is very clear when we speak with our customers, especially in steel, aluminium and automotive. It is limiting their ability to expand and invest right now.”

The response, Lafontaine continued, was split as we entered 2026. Some were continuing to focus on keeping their powder dry, awaiting further clarity from the market, while others were recognizing the importance of introducing additional digital resilience and end-to-end supply chain management to have more flexibility to adapt, finding a way to move their business forward while still maintaining a defensive posture.

Myny expanded on the question of tariffs to examine the Canadian economy from a more historic point of view, arguing the levies placed on Canadian products accelerated the decline of the manufacturing industry rather than starting it.

“Over 20 years ago in 2000, it [the manufacturing sector] represented 16.5 per cent of our GDP. Now it’s just 8.5 per cent,” he said. This trend was mirrored with a continual drop in investment for advanced technologies by Canadian manufacturers. Myny noted that since the 1980’s, investment in industrial machinery and equipment has decreased by 30 per cent in Canada. In the same period U.S. businesses have doubled their investment. As Canadian businesses and the government aim to bring business north of the border, this will need to be corrected for Canada to keep up with American productivity.

Attar reiterated that this lack of investment is going to, “lead to our own peril,” and emphasized that in the face of tariffs, businesses can rely on the productivity cushion robotics and other automation solutions provide to protect growth and create a competitive advantage over other businesses unwilling to invest.

Energy efficiency and sustainability

A continued focus on sustainability and energy efficiency was a huge talking point for the panel. This may seem unsurprising given that Siemens, Schneider Electric and IFS all have significant ties to the energy sector, but what resonated was the focus their clients were putting on remaining green.

“Sustainability is not just a regulatory hurdle but a cost reduction strategy,” Slowik said, who highlighted that North American businesses who want to do work in Europe need to align their best practices with a more stringent level of regulation.

Lafontaine shared Slowik’s outlook, calling energy, “the next KPI,”, with Canadian clients incredibly focused on reducing their energy usage to stabilize costs.

Even outside of the manufacturing industry, Attar, who works within the construction industry, found that clients are taking a pragmatic approach to sustainability goals, noting that, “the ROI remains in eliminating waste and sourcing better materials.”

This trend will be one to track as the current federal administration moves away from previous government climate commitments, with a new study published in February by the Canadian Climate Institute saying Canada is not on track to meet any of its climate targets because of, “a slackening of policy efforts over the past year, marked by the removal or weakening of climate policies across the country.”

The defence discussion

A point of discussion between the Canadian contributors was the commitment to increased defence spending by the federal government and the impact it may have on the manufacturing sector. The tone of the discussion was optimistic, provided the funding is supported by sound strategy and manufacturers are willing to invest to capitalize on the dual-use opportunity.

“I think a lot of people are looking at this as a stimulus, but the stimulus is very focused,” Lafontaine said. “It’s going to touch every single piece of the ecosystem as it scales up.

“When we want to build a boat or a plane, there is a whole industry behind it to feed it. Steel, specialized high-grade material, high precision… a lot of technologies required to get that high level of perfection,” he said.

Myny said he saw this investment as a great opportunity to revitalize and stimulate the R&D and supply chain sectors for aerospace and defence, particularly as it relates to reshoring the portion of the supply chain currently served by other countries.

Through these efforts, he said, we can support growth in the manufacturing sector while simultaneously increasing Canadian sovereignty, a concept that resonated throughout the panel, not only as it related to defence spending but also data sovereignty in the face of a continued push towards AI.

“To me, defence investment is about pulling from our industrial capacity,” Attar said. “How do we build trusted systems, with the ability to deploy cybersecurity… and how does dual- use manufacturing strengthen our industrial base. That is at the heart of what we’re talking about.”

Looking forward

The final question asked to each panelist was for each of them to look ahead 365 days and imagine we were convening for the conversation again. What would the Canadian manufacturing sector look like?

The group sentiment was that AI and automation would no longer represent trends to discuss, but instead would rapidly be moving towards representing the backbone of the manufacturing industry.

“I see a strong adoption of AI whether it is in the engineering stage, in the runtime stage, to change the customer experience and with more investment on the cybersecurity side to protect the manufacturing assets,” Myny said.

This backbone will be built of embedded AI solutions driving the rapid rise of more complex automation opportunities and an acceptance from business leaders that AI is not an opportunity, it is a necessity.

“The day AI will be successful is when we stop talking about it so much,” Slowik said. “I think we’re going to see some of that happening in a year’s time. Manufacturers are going to have to rethink how these digital workers will fit into the current workplace.”

Moreover, it is clear this year and the years to come represent a major turning point, not only for the industry but the Canadian economy. “We are going to wake up in 12 months and know the world has changed,” Lafontaine said. “It’s no longer just about efficiency gains, but its going to be about resilience.”

“The next decade is going to belong to manufacturers who are going to deploy automation quickly and measure the outcomes,” Attar said. “Automation is no longer about replacing people, it’s about protecting growth.