We asked 456 manufacturers about the state of the industry. Here’s what they said.

The manufacturing industry continues to be in the midst of a sea of change. Buffeted by rising costs, fast-evolving technology and shifting consumer demand, manufacturers face continued pressures to adapt and develop new ways of doing business.

To find out how manufacturers better navigate this turbulent era, Wipfli spoke with 456 manufacturing executives to pick their brains on key trends, challenges, solutions and more. This group included executives leading businesses generating anywhere from under $5 million to over $75 million in revenue, covering a broad range of process types and almost 20 specific industries.

The full results are only available in our annual manufacturing benchmark report. However, you can keep reading to learn key highlights.

What are the major trends and challenges shaping the manufacturing industry today?

The 456 manufacturing executives who participated in Wipfli’s survey identified several key trends and challenge areas that are currently shaping the industry. Respondents emphasized the cost of doing business, profitability challenges, adapting to tariff prices and reducing an excess of open capacity.

Key trends to watch for include:

• Raw materials pricing: Perhaps the biggest cost driver for manufacturers right now is the price of raw materials. This is largely tariff-related, with pressures from Section 232 and Section 301 tariffs boosting the price of steel, aluminum, copper and other essential material imports. The Iran war has also created major volatility in oil prices.
• Tariff pressures: In addition to raising costs, tariffs have also pushed companies to move away from a cost-driven sourcing model to one that also considers risk and public policy. Tariffs also continue to create uncertainty, especially as new tariffs under Section 301 could take effect by mid-summer.
• General cost of doing business: Beyond raw materials prices and tariffs, manufacturers also report concern over the general cost of doing business. Additional pressures contributing here include signs of renewed inflation (which could lead to an interest rate hike later this year) and the perennial challenge of labor costs.
• Variable quoting performance: Quoting has been highly variable depending on industry, with aerospace, defense and infrastructure beating expectations while appliance, heavy truck and agriculture underperform. Tariffs appear to have boosted quote activity, but without a corresponding increase in work.
• Declining profitability for metalformers: Some process types have actually increased profitability year over year. But metal formers have been hit especially hard by the higher cost of raw materials, and as a result, have suffered from a profitability perspective.
• Pricing passthroughs: Having already absorbed tariff-driven price increases, many manufacturers are now struggling to pass those costs along to their customers. Neither business nor consumer customers are eager to accept price hikes, creating a challenge especially for smaller manufacturers whose larger rivals may have a greater capacity to ease into price increases over a longer timeline.
• Improved operational efficiency (mostly): In a sign that the manufacturing industry has evolved noticeably in the last year, many processes reported improvements in operational efficiency, as measured by value per full-time equivalent. However, metalformers experienced a dip.
• Excess open capacity: The manufacturing industry has an abundance of open capacity, with average capacity utilization currently sitting at around 60%. Many manufacturers expect to push that number 3 to 5% higher by the end of the year, but this remains a major opportunity for growth.

Despite the challenges they face, many manufacturers are broadly optimistic. Roughly 60% report they expect to increase revenue in 2026, with most of that group projecting a jump of between 5% and 10%.

How should manufacturing businesses adapt to today’s challenges?

To meet today’s challenges and protect profitability, manufacturers must be open to evolving core business areas like pricing, operations, technology and sales. Leaders need to rely more heavily on data to understand what’s happening — including in big picture areas like politics, international relations and public policy — and make faster adjustments than were necessary in years past.

Here’s top areas where you should consider taking action:

1. Avoid price decreases

Your customers are likely slow to accept price increases but quick to ask for a discount. Don’t give into that dynamic if you can help it.

For example, if and when the Iran war is permanently resolved in a way that brings fuel prices back down to prewar levels, you can expect customers to argue that lower fuel costs mean your prices should be lower too. Be prepared to resist that line of thinking, especially if you only recently pushed through necessary price increases that were a long time in the making.

2. Get smarter about your business

You can no longer assume last year’s results will hold this year. Quoting is more variable than in the past, so you have to get smarter about forecasting and understanding your end-use markets if you want to stay profitable.

To do this, draw on three different sources of insight: Third-party forecasts, your own historical customer data and customer-specific forecasts. The first two sources will help you understand big-picture trends you may be dealing with, while the third can help you get a better sense of what to expect from key customers.

You can use an AI agent to help with forecasting here, but make sure you validate any data you use, as the old adage of garbage in, garbage out still applies. You may also benefit from seeking guidance from a third-party advisor, especially in areas like public policy that may be outside your scope of knowledge but are having a notable impact on your business.

3. Make tactical technology upgrades

Implementing more modern systems or a stronger data foundation can give you a clearer sense of what’s happening inside your business while also helping you work faster. This doesn’t mean you need to upgrade everything, but you should consider where targeted technology investments could deliver the most impact.

For example, you might benefit from new systems like a modern enterprise resource planning (ERP), manufacturing execution system (MES) or customer relationship management (CRM) platform. Or it might be more valuable for you to invest in a modern data lake to give you the data foundation you need to actually take advantage of newer systems or tools down the road.

Don’t neglect cybersecurity here either, as the vast majority of businesses will experience regular attempted cyberattacks. Consider newer vulnerabilities like AI tools, which your team may be using without official governance policies in place and can risk exposing key business data to hackers or publicly available AI models.

4. Focus on selling your open capacity

If your business is like the average manufacturing company, which is currently sitting on roughly 40% open capacity, you have a major growth opportunity. But you have to sell that open capacity to claim it.

Take another look at your sales process, plus your costing and quoting models. How can you sell into that open press you have?

You want to understand your capacity and flexibility, including whether you can offer customers a lower rate to get an unused machine into use again.

Get the full Wipfli 2026 manufacturing benchmark report

To learn more about what 456 manufacturing executives told us about the state of the industry, check out Wipfli’s complete 2026 manufacturing benchmark report. The 159-page report includes data-driven insights in areas like operations, finance, workforce, sales and technology to help your business adapt to meet the moment.

Get the 2026 manufacturing benchmark report

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