Q1 2026 manufacturing trends: Mood is up but so is the cost of doing business
- Wipfli’s Q1 manufacturing trends survey of more than 300 industry leaders found both optimism in the market and concern over rising costs.
- Manufacturing leaders report frustrations over tariffs, labor costs, inflation and price pass-throughs, but also expect revenues to rise and EBIT to go up or stay flat.
- As you assess your own Q1 performance, you should reevaluate your strategic plan, track your tariff exposure and do a deep dive into your sales process to look for opportunities to win more profitable jobs.
How are manufacturers tackling 2026 so far? Wipfli’s Q1 survey of more than 300manufacturing leaders to identify key trends reveals a nuanced picture of an industry that’s optimistic but still navigating a period of intense change.
After enduring a rough 2025, manufacturers now express more confidence in the direction of their businesses. However, costs have also continued to rise, making cost containment a top priority over the next three quarters.
Keep reading to learn more about what manufacturers are saying and doing heading into Q2.
Who participated in Wipfli’s Q1 manufacturing trends survey?
Every quarter, Wipfli surveys hundreds of manufacturing leaders to learn more about the challenges and opportunities facing their businesses. For Q1 2026, we surveyed more than 300 leaders across a range of manufacturing process types, including:
- Metalforming
- Molding
- Die builder
- Gears
- Mold builder
- Fastener
- Machinery
The survey included manufacturers from industries like automotive, heavy truck, agriculture, defense, aerospace, medical and appliance. Participating firms varied in revenue from under $5 million to over $75 million.
The full results are only available to survey participants, but this article offers a high-level overview.
What key challenges are manufacturing industry leaders reporting after Q1 2026?
As we head towards the second quarter of 2026, manufacturers report that the cost of doing business remains a top concern. Tariffs, labor costs, pricing pressures and talent development are all straining margins, although some sectors are experiencing greater challenges than others.
Here’s more details on key challenges identified by the 301 manufacturing leaders we surveyed:
- Higher cost of doing business: This was the top concern of manufacturers who participated in the survey. Contributing factors here include materials, wages and operating costs.
- Raw metal tariffs: Manufacturers specifically identified tariffs on raw materials as a major frustration factor. Uncertainty remains a huge factor here, with the recent Supreme Court ruling invalidating the IEEPA tariffs imposed by the White House adding a new wrinkle to an already complicated situation.
- Continued inflation: Inflation has slowed from its pandemic-era peak, but continues to create challenges for manufacturing, with end consumers cutting back or even holding off on larger purchases like cars.
- Talent development: Labor challenges are nothing new, but this year, manufacturers face new pressures to adapt and upskill in response to an AI revolution that continues to ripple through the business world.
- Price pass-throughs: Businesses have been reluctant to pass the full cost of tariffs onto their customers to avoid spooking demand. But manufacturers are still eating those costs, with consumer-facing manufacturers often pushing their suppliers to take on some of the damage.
Other areas manufacturers report feeling concern include overseas competition, a potential recession and supply chain challenges.
Overall, manufacturers are more optimistic than they were a year ago
Despite a litany of challenges, most manufacturing leaders are optimistic. Fifty-four percent of executives who participated in the survey said they are optimistic, up from 40% a year ago. Most of the rest were ambivalent, with only 12% describing themselves as pessimistic.
Performance differs across industries
However, some industries have it easier than others. Leaders in marine, infrastructure, medical, commercial aerospace and defense largely reported that their firms are beating expectations, while automotive, appliance and packaging companies were more likely to share that they are missing performance targets.
Quote levels are up
Even some of the industries currently underperforming have reason for optimism. Quote levels are generally up from a year ago, including in automotive and packaging, as well as aerospace, defense, medical and infrastructure.
More manufacturers are hiring
Hiring rates have risen since last year. The number of respondents reporting layoffs is down 66% against Q1 2025,and 38% more firms report hiring for growth than did at this time last year.
Most leaders expect revenue to rise
Most manufacturing executives expect revenue to rise this year, with 38% projecting growth of 5-10% and 19% expecting to grow by 10% or more. Only 9% say their revenue will likely fall compared to 2025.
EBIT will largely stay flat or grow
Finally, EBIT will likely either stay flat or increase. Fifty-eight percent of leaders think their EBIT will remain the same, and another 32% are expecting improvement in EBIT.
What should you do next?
Visibility and adaptability are the keys to success. Your cost challenges won’t go away overnight and tariffs remain anyone’s guess, but if you have a clear understanding of what’s happening inside your business and are willing to adjust to meet the moment, you have a pathway to success.
Consider:
1. Assessing your strategic plan
You probably prepared one heading into 2026, but is it holding up? Review your existing strategic plan in light of your own Q1 results and make adjustments where needed.
2. Evaluate your tariff exposure
Tariffs will remain a factor for the next several years, as the White House has moved to impose new tariffs under different statutes after the Supreme Court struck down tariffs that relied on IEEPA. If your own materials costs are suffering, evaluate your supply chain to understand what countries you’re importing from so you can forecast your tariff exposure more accurately and consider possible alternatives.
3. Take another look at your sales process
Your sales process can offer a path to greater profitability. Do a deep dive into your existing process: study your top customers, consider whether you’re diversified enough and see which types of jobs earn you the most profit. Think about pricing too — if you have an idle press, for example, could you lower prices a little to create work for that machine?
How Wipfli can help
We advise manufacturers on improving performance, navigating change and growth. Let’s talk about the specific challenges you face and how we can help your business thrive. Start a conversation.
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