2026 Manufacturing benchmarking survey shows cost pressures

Wipfli’s latest manufacturing benchmarking survey shows U.S. manufacturers are navigating sustained cost pressures while maintaining a cautiously positive outlook for 2026.

Based on responses from 456 facilities, the report highlights how tariffs, raw material volatility and uneven demand are shaping profitability and decision-making across the industry.

“Top concerns have largely remained unchanged, with raw material pricing and the overall cost of doing business continuing to lead the list,” said Cara Walton, director of manufacturing market intelligence at Wipfli. “What we’re seeing now is those cost pressures becoming more directly tied to tariff activity, which is creating ripple effects across profitability and pricing strategies.”

Tariffs and rising costs continue to challenge margins

Manufacturers report raw material price volatility (26%) and labor costs (21%) as the primary drivers of higher operating expenses.

Tariff-related uncertainty is influencing sourcing strategies and contributing to delays in work, as companies adjust pricing and supply decisions.

Walton noted that cost increases tied to tariffs are particularly difficult to manage because of the lag in passing higher prices on to customers.

“Manufacturers are often able to pass through raw material price increases, but it takes time,” Walton said. “That delay creates margin pressure, especially for smaller suppliers working with larger customers where negotiations are more complex.”

Profitability varies across sectors

While demand remains steady or improving for many organizations, profitability continues to vary by segment.

Metal formers are experiencing the most significant pressure, with margins lagging behind other manufacturing sectors.

“The segments most exposed to raw material volatility are also the ones seeing the greatest pressure on margins,” Walton said. “Even when price increases are passed along, the timing gap erodes profitability in the interim.”

Growth outlook remains positive but uneven

More than half of surveyed manufacturers report a positive outlook for 2026, with about 60% expecting revenue growth of at least 5%.

However, demand differs significantly by industry. Aerospace, defense and infrastructure sectors are outperforming expectations, while heavy truck, agriculture and consumer-related segments are seeing weaker demand.

“Industry performance is highly variable right now,” Walton said. “Manufacturers need to be more precise in how they forecast demand and understand their end markets.”

Operational discipline and investment remain priorities

Manufacturers are placing greater emphasis on cost control, operational consistency and data-driven decision-making.

Many companies are reviewing input costs more frequently and adjusting pricing strategies in response to market changes.

Capital investment remains steady at roughly 5% of revenue, with a focus on automation, productivity improvements and flexible capacity.

Organizations are also strengthening forecasting and analytics capabilities to better align internal data with market conditions.

“Companies that can align their internal data with market signals and customer demand will be better positioned to make accurate decisions,” Walton said.

Managing capacity and uncertainty

Capacity utilization remains around 60%, with modest improvement expected.

At the same time, forecasts often exceed actual utilization levels, reinforcing the need for disciplined planning and execution.

Manufacturers that actively manage open capacity, align pricing strategies and maintain flexibility are better positioned to respond to ongoing volatility.

“Even with a positive outlook, the path forward is not going to be linear,” Walton said. “Organizations that stay disciplined in how they manage costs, pricing and operations will be best equipped to turn volatility into a competitive advantage.”

Download the full manufacturing benchmarking report

Get deeper insights into performance trends, sector benchmarks and forward-looking analysis in Wipfli’s full 2026 Manufacturing Benchmarking Survey.