The New Industrial Internet: How Manufacturing Software Got Sexy Again

Once the overlooked sibling in the tech world, manufacturing software is driving a renaissance in a sector grappling with aging infrastructure and global competition. Companies like Canada’s CoLab are reinventing industrial workflows with AI-powered collaboration tools, transforming design and production cycles and reimagining physical manufacturing as a digital-first industry.

A manufacturing revolution is unfolding in St. John’s, Newfoundland—a city typically more associated with the rugged beauty of its coastline than cutting-edge technology startups. CoLab Software, a homegrown tech company, recently announced a $72 million Series C funding round led by Intrepid Growth Partners and joined by investors like Insight Partners and Y Combinator. The funding is the latest signal that industrial software, long overshadowed by consumer-oriented apps and e-commerce platforms, is experiencing a seismic shift in relevance.

Driven by advances in artificial intelligence (AI) and burgeoning supply chain digitization, industrial software now represents one of the most exciting areas of tech investment. The global "Industry 4.0" software market is projected to reach $300 billion by 2030, according to InsightAce Analytic. Firms like CoLab don't just promise to cut costs; they aim to change how products are designed and manufactured altogether. By embedding AI in its product, CoLab's EngineeringOS platform compresses design cycles—from months to hours—while capturing intricate decision-making processes often lost in sprawling physical workflows.

“We envision a world where skilled engineers collaborate with AI agents that can access their entire company's collective knowledge, collapsing design cycles from months to hours,” CoLab CEO Adam Keating said in a statement. Already, the company counts giants like Ford, Lockheed Martin, and Johnson Controls among its customers, with AutoReview—its AI-assisted review tool—boasting a waitlist of more than 47,000 engineers since its launch in mid-2025.

The renaissance of industrial software illuminates a larger truth about manufacturing’s future: to thrive, manufacturers must not only produce physical goods but also embrace software that makes every step of production and design smarter, faster, and more collaborative. In a world where geopolitical tensions and reshoring efforts are reshaping supply chains, this realignment is becoming more urgent.

This trend is part of a broader transformation commonly referred to as the new "Industrial Internet." Historic manufacturing powerhouses like Siemens, Rockwell Automation, and Ford are rapidly repositioning themselves as software-driven companies, investing in technology platforms that enable seamless collaboration across global engineering teams. Siemens' recent launch of "Digital Twin Composer" at CES 2026 is a case in point. Part of the Siemens Xcelerator platform, the tool creates virtual replicas of physical assets—bridges, assembly lines, or even entire manufacturing facilities—allowing manufacturers to simulate and refine designs before committing resources to production. In a pilot with PepsiCo, Siemens' tools increased throughput at U.S.-based facilities by 20%, while identifying nearly 90% of potential operational issues before deploying physical changes.

CoLab, also a partner in tackling the "knowledge capture problem," takes a slightly different approach, reflecting its origin outside the traditional industrial powerhouses of Europe and the U.S. Midwest. Founded in 2017, CoLab’s competitive advantage stems from eight years of digitized engineering annotation data. Its platform focuses not only on tracking design changes but also understanding the “why” behind them—a critical distinction when accelerating design cycles.

“Every design decision leaves behind context: the discussions, trade-offs, and rationale that explain why a product is designed a certain way,” said Jeremy Andrews, CoLab's CTO. “What we’ve learned is capturing that knowledge is a user-experience problem. Engineers will only share what they know if the process feels natural and valuable—and that’s the breakthrough CoLab has made. Without that, expert design knowledge stays locked in people’s heads.”

This is no small problem for a sector staring down significant demographic challenges. The aging manufacturing workforce carries decades of expertise that many fear will dissipate as senior engineers and skilled tradespeople retire. Data from various sources, including the Bureau of Labor Statistics, shows that more than 50% of the advanced manufacturing workforce is over 55, and the share of workers nearing retirement has more than doubled in 30 years. Knowledge retention becomes increasingly critical as countries like the U.S. and Germany face widening skills gaps in their manufacturing sectors.

The shift toward industrial software is also a response to global pressures. In the wake of supply chain shocks and rising geopolitical tensions, companies are accelerating investments in nearshoring production lines. According to the BlackRock report on manufacturing trends, 81% of manufacturers planned to move production closer to their primary markets in 2024, up from 63% in 2022. Digital tools like collaborative EngineeringOS platforms not only offer greater efficiency but also facilitate the high degree of coordination needed across distributed teams.

However, this shift isn’t without winners and losers. By successfully integrating AI and digital twins into their production ecosystems, companies like PepsiCo and Ford gain a competitive edge, as these tools reduce costs, improve product quality, and uncover hidden efficiencies. But the transition to digital manufacturing platforms raises questions about how smaller manufacturers—already struggling to meet growing demands—will shoulder the costs of these technology investments.

The redefinition of manufacturing also forces traditional employers to rethink their workforce strategies. In a world where AI copilots conduct compliance checks and identify production errors, what becomes of the tradespeople and engineers who built factories in the mid-20th century? Efforts like CoLab’s knowledge model and Siemens’ workforce retraining partnerships with Microsoft suggest that software may augment—rather than replace—human expertise. Whether that potential is realized depends on cooperation among companies, governments, and educators. As BlackRock’s infrastructure report explains, “To transform potential into reality, companies, governments and schools must collaborate to modernize and scale training pipelines.”

While today’s software platforms promise significant productivity gains, their long-term impact on manufacturing competitiveness and worker roles remains uncertain. As automation evolves, so too does the skillset required by workers, blending coding and technical know-how with traditional crafts. This tension between progress and displacement defines the stakes of manufacturing's reinvention.

In simpler terms: the next industrial giants may not look much like the Fords or GEs of old. Rather, they could resemble CoLab—a software company that just happens to specialize in manufacturing. Whether policymakers and private companies can unite to mitigate disruption for workers and bridge the skills gap remains one of the defining questions of the new Industrial Internet.