Industry 4.0, Smart Manufacturing, Factories of the Future (FoF) all describe aspects of the heralding era of digitalization of manufacturing aiming to interconnect every step of the manufacturing process and seamlessly integrate the physical and digital world. In FoF a central computer organizes the intelligent networking of all subsystems, suppliers and customers into one system. All relevant requirements concerning manufacturing and product are confirmed at design time, while execution takes place autonomously as ICT and automation are integrated. In the context of digitalization we consider there are three kind of challenges: one which targets the companies, other which target the employees, and the last one aiming the educational system which should include in its curricula bachelor and master study programs which prepare students for the following jobs: Virtual Reality/Augmented Reality System Specialist, Digital Manufacturing Engineer, Digital Factory Automation Engineer, Chief Digital Officer, etc. The main important challenge is represented by educational system, how prepared is to provide students, future employees, the digital competences necessary for the Factories of the Future. What are the structural and curricular measures Higher Education Institutions need to take in order to align engineering education, especially in the design of all constituents of Factories of the Future, with the need of competences in new manufacturing era ?