6 manufacturing trends to watch as you near the end of 2025
2025 has been a wild ride for manufacturers. Tariffs, uncertainty and fast-changing regulations are among the manufacturing industry trends that have shaken up the playing field and left many leaders hesitant to make any big moves.
To help you better navigate this environment, Wipfli surveyed 249 manufacturing businesses with revenues ranging from under $5 million to over $75 million to find out more about how they’re approaching today’s challenges.
Based on that data, here are six key trends shaping the manufacturing industry as the calendar heads toward the end of 2025.
1. Manufacturing leaders are less confident and more worried in 2025.
Overall, confidence has gone down since the start of 2025. Manufacturers now worry about the negative impact of tariffs, are concerned about the rising cost of doing business and fear that a recession might be coming.
- 70% of manufacturers cite raw material tariffs as their largest concern.
- 63% state that the higher cost of doing business also continues to be a source of worry.
- 58% fear a recession, due to lower demand across the vast majority of manufacturers.
- Inflation and the related upward wage pressures remain a concern, but have reduced in severity compared with 2024.
This decline follows a trend in reported confidence over the last few years. Beginning in 2020, the industry has navigated COVID-19, followed by dramatic growth in consumer demand and supply chain issues, and now tariff and trade uncertainty.
Manufacturer confidence did begin moving upward in 2024, prior to the U.S. election, but as of Q2 2025, this sentiment dropped significantly.
2. Manufacturing capacity utilization falls.
Manufacturers across nearly all process types report that capacity utilization is down so far in 2025. This is because customers, driven by uncertainty, are waiting to launch new products or increase inventory. This is true for customers in almost every industry, too.
As in 2023 and 2024, manufacturers have continued to forecast capacity utilization to be higher than actuals, with Q2 2025 seeing the highest delta:
- Leaders had projected that Q2 2025 capacity utilization would reach 63%.
- However, the real number was 53%.
- 65% of manufacturers also said revenue was flat or declining.
Heading into next year, most manufacturers also expect revenue to go down year over year. Meanwhile, about one-third are hiring for growth or open positions, while the remainder are holding steady or considering layoffs.
3. Industry profits are largely flat or slightly declining
Financial performance for manufacturers slipped slightly in 2024. For shops, however, profitability was largely flat based on the median.
One factor here is that reduced material content and improved throughput did not equate to improved profits. This was the result of various cost drivers that eroded manufacturers’ margin potential.
This performance has moved some companies from a comfortable financial position to questionably bankable, based on the manufacturer’s debt-to-earnings ratio.
How has manufacturers’ financial stability changed in 2025?
Overall, manufacturers are slightly less financially stable in 2025 than in previous years. Across the industry, Wipfli found that:
- Companies with less than a 1.5 debt-to-earnings ratio or in comfortable financial positions have dropped from 52% to 46% of the respondent base in just three years.
- One-third of all manufacturers are in the questionably bankable category. This further illustrates the need to right-size businesses and focus on what you can control.
4. Labor and SG&A costs challenge profitability.
So far this year, labor and selling, general and administrative (SG&A) expenses have been major cost drivers. This is a significant factor that has challenged industry profitability.
- Even top-performing manufacturers dropped in overall profitability and operational efficiency in 2024. This marks a continued decline from the boom profits of 2021.
- Despite the fact that many manufacturers maintained or improved efficiency, overall profitability still dropped.
- Volume and utilization are down, and manufacturers are allowing waste to drift into their plants. While material content has reduced on average in 2025, SG&A spending has grown.
- Underperformance may not be showing up in efficiency, but it is appearing in cost management as most costs continue growing. Continuing to focus on efficiency and cost management is important.
- Manufacturers should be bolder when it comes to cost management and efficiency because they have control. They need to reduce waste through overtime reduction, labor cost management and scheduling improvements.
5. Capex has remained flat, driven by negative tariff impacts.
Most manufacturers report that tariffs have harmed their businesses. This impact and related tariff-driven uncertainty have led manufacturers to largely avoid major new capital expenditures.
A conservative, wait-and-see approach towards capex isn’t new. In 2022 and 2023, many manufacturers maintained a holding pattern in response to supply chain challenges, while in 2024, they were waiting on the results of the presidential election.
However, tariffs have extended this run of caution. Businesses report hoping that tariffs will settle into final numbers in late 2025 so they can make decisions.
How do manufacturers feel about tariffs?
Manufacturers are largely negative or neutral about the effects of tariffs imposed in 2025. Based on Wipfli’s research:
- 51.1% of manufacturers said tariffs have had a negative business impact.
- 18.7% saw tariffs as delivering a positive impact.
- 30.2% stated they had seen no impact from tariffs.
6. Sales still holds great opportunity.
For leaders looking for the silver lining of opportunity, sales represents an area with growth potential. For many manufacturers, costs are rising, but sales are not.
- Hit rates average about 10% across manufacturers and are down from last year.
- Quote activity has increased in recent months as many customers are market testing shops due to tariffs and the potential of reshoring some production to the U.S. Unfortunately, work won has not increased at the same rate as quoting.
- Churn continues to be a major factor for manufacturers (churn refers to the loss of business due to product discontinuation or declining volumes).
- The data shows big changes in automotive churn in 2024 as OEMs rationalize product and focus on those models that make the most money. This has caused loss of trim levels and volume for some automotive suppliers.
These are challenges, to be sure. But businesses that find a way to boost sales will be better able to offset the rising cost of doing business and navigate uncertainty around tariffs and trade.
How Wipfli can help
Get help on strategy, growth and navigating changing policies like tariffs. Ask our team of manufacturing advisors to assess your needs and deliver tools and solutions to help you make smarter business decisions. Start a conversation here.
Upgrade your manufacturing business
