Turbulent 2025 sees decline in positive outlook for engineering sector
Engineering Industries Ireland (EII), the Ibec group representing the engineering manufacturing and services sector, has stated that business sentiment for the sector has reversed the improvements recorded in 2023 and 2024. More firms now rate their business outlook for the months ahead as "average" 47% from 25% in 2024 rather than "good" (44%) from 58% in 2024.
The engineering sector - comprising 11,906 enterprises, employing 62,068 people with a net turnover of €28.9 billion and an output value of €22.5 billion - identified "trade uncertainties" as its biggest challenge. This concern has risen considerably to 62%, compared to 25% in 2023 and 38% in 2024. According to the sector’s report, other top challenges include the cost of labour, weaker global growth, and the difficulty of attracting and retaining quality staff.
While the sector has seen an increased prioritisation of AI (up from 25% to 41%), the report notes that fewer firms are linking AI adoption with increased profits.
EII also recently submitted its priorities for the upcoming EU Presidency in July, stating that Ireland can help position Europe as a global leader in industrial engineering excellence by future-proofing industry, creating high-quality jobs, and reinforcing the foundations of a strong, sustainable Europe at a time of significant trading uncertainties. The submission focuses on five key priority areas:
- Global Trade Competitiveness
- Affordable Energy Future
- Dual-Use Strategies
- Skills and Talent Development
- Fostering Diversity and Inclusion
Pauline O’Flanagan, Director of EII, said: “The engineering sector remains in an incredibly resilient position. However, the report also shows consistent increases in the costs of wages, transport, and energy, all of which are placing cost competitiveness pressures on the sector. This is coupled with the significant investment in recent years in AI and sustainability initiatives, all occurring against the backdrop of a turbulent 2025 trading environment.
The strength of the sector is very much pan-European. As global markets shift, energy systems transform, and technological innovation accelerates, engineering industries across Europe are at the heart of shaping a competitive, resilient, and sustainable future. The Irish Presidency offers a unique opportunity to lead on policies that strengthen Europe’s industrial base, something which will further enhance key sectors such as engineering. Across Europe and in Ireland, we have seen how the sector is advancing innovation in carbon-neutral energy, electrification, alternative fuels, and clean manufacturing technologies.”
