Xometry report: Supplier access overtakes assets as key advantage
- 57% of manufacturers report significant AI ROI, up from 44% a year ago
- 44% of firms under $50 million revenue operate below 70% capacity, versus 16% of firms above $100 million
- 94% of manufacturers plan to raise prices in 2027, with only 20% facing meaningful buyer pushback
- AI and automation operators are the hardest roles to fill, with 25% of firms seeing no hiring improvement from pay raises
*this image is generated using AI for illustrative purposes only.
Xometry Inc. (NASDAQ: XMTR) released its second annual Manufacturing Outlook, identifying a structural shift in competitive advantage. The report argues that access to capacity and qualified suppliers now outweighs ownership of physical assets for manufacturers navigating 2027.
AI payoff shifts upstream
The analysis indicates that artificial intelligence is delivering its highest returns in pre-production stages rather than on the factory floor. Manufacturers expect the greatest impact from AI in manufacturability, costing, and quality control, significantly ahead of production execution.
| AI Impact Area | Expected Impact (%) | Status |
|---|---|---|
| Manufacturability & Costing | 51% | Highest |
| Quality Control | 47% | High |
| Production Execution | 32% | Lower |
Reported ROI from AI investment is climbing, with 57% of manufacturers citing significant returns, up from 44% a year ago. However, the report highlights a gap: much of this ROI stems from general-purpose tools lacking grounding in real pricing or capacity data. The competitive edge is shifting toward accessing AI systems integrated with actual manufacturing metrics.
Idle capacity concentrated in small shops
A significant disparity exists in industrial utilization rates based on company size. Smaller manufacturers possess far more idle capacity than their larger counterparts, suggesting untapped potential if certification barriers can be overcome.
| Company Size | Operating Below 70% Capacity | Implication |
|---|---|---|
| Under $50 million revenue | 44% | High idle capacity |
| Above $100 million revenue | 16% | Near full utilization |
Certifications remain the primary gateway to unlocking this capacity for higher-value work. In the aerospace and defense sectors, 42% of manufacturers rank compliance as a top obstacle to winning new business, indicating that regulatory readiness is a critical bottleneck for smaller firms seeking to fill their idle lines.
Procurement dynamics and labor gaps
With material costs, tariffs, and labor pressures forcing 94% of manufacturers to raise prices again in 2027, buyer pushback remains low at approximately 20%. This dynamic shifts leverage to procurement teams who must focus on controllable levers such as supplier optionality and sourcing flexibility rather than price negotiation alone.
Simultaneously, the labor market is experiencing a skills mismatch rather than a simple headcount shortage. AI and automation operators have become the hardest roles to fill, surpassing quality engineers and CNC programmers. Notably, 25% of manufacturers reported that raising pay produced no meaningful improvement in hiring or retention, suggesting that financial incentives alone are insufficient to address the specialized skill gap.
What the numbers show
The divergence between utilization rates and price elasticity reveals a fragmented market structure. While large firms operate near capacity (16% below 70%), small firms have significant slack (44% below 70%). Yet, 94% of all manufacturers are raising prices due to external cost pressures. This combination suggests that the industry's constraint is not aggregate capacity, but rather the friction in matching demand with qualified, certified suppliers. The low buyer pushback (20%) despite widespread price hikes indicates that supply chain reliability and access currently command a higher premium than cost efficiency.
How might the shift in AI ROI toward pre-production stages influence the capital expenditure priorities of manufacturing software vendors in the next fiscal year?
What specific regulatory or technological innovations could most effectively lower certification barriers for small manufacturers to unlock their idle capacity?
Given that pay raises have failed to address the skills gap, what alternative retention strategies are emerging for AI and automation operators?
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