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In a fabrication shop outside Lexington, KY, MiddleGround Capital builds robotic work cells: self-contained stations where robots perform tasks with minimal human involvement.
The PE firm’s automation team—roughly a dozen engineers and fabricators, many recruited from the Toyota plant up the road—assembles these cells near the firm’s headquarters, then trucks them to the shop floors of its portfolio companies.
A typical build, founding partner Scot Duncan said, is “a robot arm on a little dolly.” It opens the door of an industrial workstation, removes and measures a finished part, loads new material and starts the next cycle. “The human interaction is really almost nothing when it’s actually running,” Duncan said.
The setup is futuristic-looking, yet it is not generative AI, it is automation. That distinction is becoming increasingly important—and blurred—as PE firms race to put AI at the heart of an American manufacturing revival.
The private sector has made nearly $2 trillion in spending commitments to the US manufacturing industry since 2025, much of it spurred by investors’ belief in AI’s potential to boost productivity, according to trade publication IndustrialSage.
In March, The Wall Street Journal reported that Amazon founder Jeff Bezos held early discussions about raising as much as $100 billion for a vehicle to acquire manufacturers and accelerate their automation using AI. His startup, Prometheus, closed a $12 billion funding round in June at a roughly $41 billion valuation.
On Monday, the Institute for Supply Management’s manufacturing index, which measures sector sentiment, hit 55.6, its highest reading since May 2022.
Yet when it comes to AI implementation, interviews with investors, manufacturers and investment consultants suggest that while AI is spreading across finance, sales, forecasting and engineering, productivity improvements on the factory floor still come from familiar sources, such as implementing robotics and lean manufacturing principles.
“Everyone’s making very audacious claims about their use of AI and how it’s going to—or already has—revolutionized their business,” said Miles Arnone, chief executive and co-founder of Re:Build Manufacturing, a permanent-capital company that owns a group of US engineering and manufacturing businesses. “A lot of that is overblown at the moment.” |
